Analytics provided by BBA

Welcome to the all new Cointelegraph Weekly Market TA Report presented by BullBear Analytics. The timing of this new partnership could not have been any better given that it appears as though bitcoin is on the cusp of challenging price levels not seen in more than two years. While the trek up to the psychologically important $1000 mark will remain volatile, this will pale in comparison to the moves we will see if the ATH’s above $1200 are broken. That said, there remain some significant areas of resistance between current levels and 1K so we would steer clear of FOMOing into the market on either the long side or the short side.

We like to begin our correspondence with a quick market summary such as the one above, however the main focus of these reports is the market action itself. The charts tend to tell the story in cryptocurrency for a myriad of reasons, and we can use these tendencies to our advantage.  So what are the charts telling us about the state of the market right now?

If we take a look at the weekly chart of BitStamp below we can see that market structure and market symmetry are painting quite a bullish picture. Following the recent weekend breakout above $600, price is now at the top of a supply area and bull trap top that goes back to June 2014. While this should be rather significant resistance, price seems to be reacting favorably at these elevated levels despite what should be an increase in sellers in here.  

Why would we see more sellers?  In the Spring of 2014, we saw a countertrend move that took price up to a $683.26 which was the last truly bullish move before the crash down into the $100’s & $200’s. What this means is that many traders that entered the market on that rally expecting new highs will be itching to take those chips off the table at breakeven, which is why resistance around here should be quite strong. Additionally, regarding momentum we can see RSI is now sitting over 80, which puts it in overbought territory, while the short term moving averages begin to accelerate to the upside. As far as volume, the A/D line is slowly trending to the upside indicating continued accumulation even at these levels, exchange volumes are low despite impressive price action which tells us that there is currently a seller’s strike generally speaking, and volume profile is thin to the upside but overall looks fairly healthy.

In terms of the longer term health and sustainability of this bitcoin bull market, we think that the technicals are telling an encouraging story.  Not only that, but given the upcoming halving, scaling improvements, and increase legitimacy of bitcoin as a financial asset, we think there is substantial upside potential over the next 3 to 6 months. Having said that, if the past is any indication of the future, then we should expect bouts of extreme volatility on both the upside and downside as the market explores new areas. In fact, given the recent run from 450 to 675 $, we think at least a brief correction and consolidation is in order.  600 $ and 520 $ are now key support levels to watch.

In future weeks we will explore the details of the lower timeframes, but for now there is not much to do other than sit back and enjoy the show until the bulls run out of steam.

BTC/USD price chart

Disclaimer: Please always do your own due diligence, and consult your financial advisor. Author owns and trades bitcoins and other financial markets mentioned in this communication. We never provide actual trading recommendations. Trading remains at your own risk.  Never invest unless you can afford to lose your entire investment. Please read our full terms of service and disclaimer at the BullBear Analytics Disclaimers & Policies page.