To give a summary of the price action previously please refer to the chart image below which shows the predicted price action for bitcoin as of the 16th of July:
The move to the downside had completed and an expected rebound of the.618 Fibonacci level was indicated from the previous Daily Bearish wick candle that occurred on the 27th of May. This .618 Fibonacci level provided a significant level of resistance and can be deemed the Fair Market price for bitcoin where speculators see the greatest value for price at that price level being approximately $1900
Subsequently the following occurred for the days that followed:
Coming off the back of news about the BIP 91 segwit2x reaching 80% support from miners, price action literally skyrocketed. As previously discussed, price found support at the .618 Fibonacci level. The downside movement generated a moderate wick yet there was no Daily candle closes below the .618 Fibonacci level it was only the wick. Immediately price began to rally drastically to the upside and as a result came close to breaching the all-time previous price high of $3000 US. Since then price has hovered around the 2600 – 2800 price range.
Short Term Outcomes
From the charts a technical analysis has provided the following likely outcomes for price action in the next 3 – 7 days.
Scenario outcome 1
There is a possibility price could continue further down to meet with the 20 Period Exponential Moving Average line 20 EMA (dark blue line). At this particular juncture, two other indicators converge at this point, being the downward trend-line (red line) and the upward trend-line (orange line). This shows that there is more than one level of support being provided at the level and price point.
Interestingly enough price action has found a new level of support which has been carved out but speculators which is found around the $2600 price level.
At a closer glance price action is forming a Triangle Pattern on the 1 hour Price chart. This means that significant resistance is found on the adjacent side (Horizontal side) of the triangle. It would require close to record highs at this stage to breach the adjacent side of this formation. Which would mean the most likely side to be breached would be the Hypotenuse side (angled side).
A break of $2600 would mean the next level of support is the 20 period EMA and price could expect another bounce off that level because for the recent break out of the bearish trend. This move downwards and bounce back up would constitute a test of the strength of the newly formed bullish trend which could see prices continue up and further than the previous price level highs back in June.
Scenario Outcome 2
If price fails to continue upward there is a probability that prices continue lower towards the most recent significant level of support being the.618 Fibonacci level. The .728 Fibonacci has provided temporary support but has been tested a number of times in the past and finally was broken to find the .618 has shown significant strength as level of support.
Scenario Outcome 3
Price would possibly range between prices $2600 – $3000 over the next coming days. BIP 91 has been locked in, however it is only one of the milestone required to activate segregated witness. BIP 148 is still approaching and markets are yet to fully react to that news development.
Long term Outcomes
The weekly chart shows that the overall outlook on bitcoin is still bullish. The market is still very bullish overall. This long term outlook shows that price is still above the 20 Period EMA, which is a significant indicator on a weekly chart and price action has not been under the 20 Period EMA level since Jan 2016.
This Bullish trend is the overall trend and the overall market view. Pullbacks are necessary and many other pullbacks will occur, yet the market is still holding its upward trajectory, so pullbacks are to be expected. The price level of $1600 US is in line with the .500 fib level which is the overall strongest level of support and if prices drop and close below this level this would suggest that the market is now bearish. Yet price would need to breach a number of other significant price levels and support barriers before something like this is worth considering at this stage.
Disclaimer: This is not investment or trading advice, always do your own independent research. Be vigilant with all your trading decisions.
Written by Tshire Mokou 23rd July 2017