Analytics provided by BBA
Despite a somewhat more bullish outlook in last week’s report, once again the market could not get sustainably above the key $680 resistance level (or below the critical 640 $ support level). We remain patient and neutral on the market for the time being.
All is quiet on the western front of bitcoinland from both a fundamental and technical perspective, hence why we remain in a range-bound market, however the same cannot be said for Ethereum. Late last week, the Ethereum project forked their blockchain in order to undo the damage caused by the DAO fiasco. While the fork was supposedly based on a consensus of miners, devs, users, service-providers, and investors, we see that this is not the case considering we now have two Ether chains running at the same time, Ethereum HF (the new and currently longer chain) and Ethereum Classic which is the old, unadulterated chain. This fascinating development is very revealing for the field of crypto-economics, and is a relevant cautionary tale for those parties that have been pushing for a bitcoin hard fork for past few years.
Regardless of how the Ethereum drama plays out as the new and old chains compete with one another for hashing power and investment capital (Ether Classic is now a separate coin that can be traded on exchanges such as Poloniex), all bitcoin can do is watch and learn. If nothing else, this controversy has highlighted that the crypto “reserve currency” status that bitcoin holds is both warranted and valuable, and sets the stage for the upside resolution we have been looking for, albeit we may be waiting for another month or two for the breakout.
So, with all of that in mind let’s take a look at the daily chart once again to see how the consolidation is playing out. We can see that there still hasn’t been much movement at all following the break of what appeared to be a bullish pennant. Apparently the market was not ready to move in either direction, which means that we are likely in for more choppy, range-bound action. It also implies a continuation of our “buy the dips, sell the rips mentality” within the current $640 – 680 trading range. Having said that, we can see that the A/D line is still pressing to the upside while the momentum oscillators attempt to recharge, indicating that the odds remain in favor of an eventual upside breakout above $750 rather than a breakdown below $550.
Seeing as though the daily chart is still inconclusive over the short to medium term, we once again turn to the lower timeframes for additional technical detail. We can see on the 6-hour chart below that we remain in the ascending triangle formation despite a break below the 200-period SMA and volume profile PoC. Neither of these are very encouraging signs over the near term, however the lack of a panicky sell-off on these breaks makes us think that the bulls are still in control. Until we get a move below the medium term uptrend line that sits around $640, also the bottom of the current trading range, or above resistance at $700 then the BTC markets will remain in consolidation mode.
Conversely, there are a few positive signals emerging with Willy still recharging nicely, RSI and MACD still chopping around the centerline, and the A/D line still moving to the upside. While we think the charts are telling us to remain patient yet bullishly biased as we progress through this period of market stagnation, we are also on watch for a fakeout move to the downside which acts as a catalyst (or “spring”) for the next leg to the upside to challenge $1000.
Generally speaking, as long as the $550 area can hold as support over the next month or two, the longer term bull market will remain intact.
BullBear Analytics is the longest standing cryptocurrency forecasters in the market. They started in 2010, doing technical reports in bitcointalk.org, and have evolved into a buzzing community of traders. Adam is BBA’s chief analyst.
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