This article will cover the recent rise in price for Bitcoin and then analyze the potential future movements for the coin.
Bitcoin Price Analysis
I know it’s been a while. There have been a slew of updates that I have posted about the brand on the different channels that I have:
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Medium = www.medium.com/thedailydose (in case you’re reading this from my personal medium account)
Twitter = https://twitter.com/cryptomedicated
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Recap of Price Movement
Now, let’s recap.
Last time that we talked about the price of Bitcoin was on July 17th when we drew those parallels between April and July’s price action.
At that point in time, the price was $6.7k. Currently, the price is sitting at $7.4k.
So, quite a lot has happened in that time space.
If you remember, $6.8k was the ‘battle zone’ for Bitcoin as described here in this TradingView analysis report:
As it turns out, everything went exactly as expected — which is awesome. But we must not take this for granted or have us (me specifically) believe that this will make me anymore intuitively ‘correct’ on future price movement than I otherwise would be because of this.
There is no such thing as a ‘lucky streak’, just good strategy.
So, now that we have a recap, let’s go to the daily chart.
Bitcoin on the Daily Chart Time Frame
Here’s a more panned out view of Bitcoin:
What Does This Trend Break Mean?
In short, no one knows yet (even if they claim that they do).
However, there are a few things that we can say definitively about this situation:
- This trendbreak does not mean that we are official in a ‘bull run’.
- This trend break does not mean that the ‘bear market’ is over.
- This trend break does not mean that the Bitcoin ETF decision to be made by the SEC in the next month or so is a “guarantee”.
For more information about trend breaks, check out this article that I wrote on the topic here:
As noted in the article, there is definitely a chance that the price breaks the trend, and then returns back below it.
This is more or less an advanced version of a bull trap.
What is a Bull Trap? (Quick Review)
Yes, this can even happen on a trend break (although they most commonly occur when traders are trading on the premise that a trend break will occur).
Now, usually, this is a very bullish sign, so what are my concerns?
Volume is Still Very Low on Bitcoin (Daily Chart)
Typically, in a normal bull run, you’d expect the buy volume to far exceed any of the sell volume, but that does not appear to be the case in this situation.
Check out below:
As you can see in the photo above (1D TF), the buy volume is still less than that of the sell volume in recent weeks in many periods.
That’s another major sign that this is not a reversal.
It would be presumptive and dangerous to trade Bitcoin as if that is the case.
Let’s take a look at the momentum on the coin now.
Relative Strength Index (RSI)
As you can see, it is in the overbought territory, which is already a caution flag in any market. However, when in a bear market and RSI has reached the overbought point, it is something that should be met with special concern.
Here’s another look at RSI that should be considered even more heavily though:
I switched to the RSI(30), because that will give us the monthly RSI (approximately) on the 1D chart.
It’s way better to do so than to do an RSI(1) with the monthly chart for mathematical reasons (check out the formula for RSI).
What you’ll see above is the fact that the RSI has not crossed the point that it is currently at since January 5th.
This is actually the point that the RSI failed to break before the enormous drop in prices from May 5th to June 28th (a reduction of 40%+).
Rate of Change of the RSI(30)
There are actually some interesting results on here. Remember, we have data points that occur every day on here since its the daily chart, but we are still tracking months into the past, which keeps it relevant for us (check out the math in an upcoming TA article if this sounds confusing).
In laymen’s terms, we can see that the RSI began losing some serious momentum on July 19th.
Let’s look at some longer term points of resistance here (we’ll include some Fib charts in this analysis as well).
Plotting Future Points of Resistance
I’m going to look at the obvious points of resistance here from the chart itself before I dig into any points of resistance that are being signaled by the indicators themselves.
Resistance Point #1— $7.4–$7.6k is a mountain that Bitcoin will need to climb over
As you can see, the RSI has been waning as the price has failed to make any momentous moves beyond $7.6k for the last couple of days. It’s been pushed back down as far as $7.1k (if memory serves as well). At the time of writing, the price is still floating just south of this resistance zone at $7.3k after being knocked back following July 20th’s attempt.
At some point in time, the bullish sentiment may begin to wane a bit and anxieties about a further continuation downward could accelerate the ‘take profit’ process of buyers. In addition, this could also lead to more apprehension about buyers entering the market the longer the price struggles to make over the $7.5k-$7.7k hump.
I’m not saying it’s impossible, but I’d be surprised.
Resistance Point #2 — The $8.2k zone is going to be another difficult one to get past
As you can see above, $8.2k has been a very sturdy resistance/support in 2018 thus far, having been tested multiple times and withstanding the upward/downward pressure on numerous occasions.
This perhaps would be an even stronger resistance to price movement than the $7.6k zone that the price is currently at.
If the price were to somehow break through the zone that we are at now, I strongly doubt that there would be enough upward momentum to carry the price above $8.2k. If that did happen, folks would be reasonable in setting their expectations to $9k and beyond.
In my opinion, $8.2k is the absolute maximum height of this current run for the month of July. So, for me personally, I can’t create any R/R scenario that involves a higher reaping of rewards than what $8.2k can offer.
Resistance Point #3 — The price of $9.5k is a game changer mark.
Check this out:
As noted in the chart above $9.5k is a MAJOR resistance for a few reasons:
- This was the point that held as strong support during the January sell-offs.
- It did the same during the enormous bounce back that occurred in February that sent the price back to the precipice of breaking through $12k (which would be “bull-run” territory in my opinion anyway)
- It throttled the previous bullish sentiment that took place in April (and that bullish undercurrent was pretty damn strong).
So, in a nutshell, $9.5k is a beast to break and it may be some months before Bitcoin’s price ever gets beyond it. If it does, then $12k would be the next mark that traders would want to seriously look at before abandoning all caution in terms of a ‘bear market’.
Let’s Take a Look At Some Potential Support Points
Support Point #1 — The Price of $6.8k will hold very strong
This probably goes without saying, but I expect that $6.8k will hold very well.
As noted in the numerous price analyses that I have posted on here before, bulls have vigorously defended Bitcoin in the $6k-7k range.
To this moment, the price of Bitcoin has not spent an entire 24 hours below $6k either. $6.8k appears to be the general of all bull price defense in this range.
However, it is worth noting that a breach of this price on its way down (if the price of Bitcoin does descend beyond this point, which I believe it will), will make $6.8k an equally potent resistance once again.
This is really one of the ‘last hope’ points apart from the lower $6k region where the bulls have notoriously defended this entire year. So, if the price does bust back here, then this should be seriously watched.
A ‘long’ trade at this point is looking more and more reckless without some sort of hedging strategy being made behind it.
I’m not necessarily asserting that it will lead to imminent destruction here, but it is something that could really get traders in some serious trouble.
- The momentum on the RSI(14) is seriously waning and it is already overbought on the daily with some clear divergence being shown.
- The RSI(30) on the daily is at the highest point that it has been since May 5th. The RSI has not crossed this point since January 5th.
- The price of $BTC is up against a pretty hefty resistance at this point, which would be followed by another strong resistance point.
- It’s hard to look at #1, #2, and #3 and feel confident about the prospects of the price movement at any point in the near future.
- The worst part about this is that this will require us to once again re-draw our long-term downtrend resistance point (see below)
Once again, $9.5k will ultimately be the most substantial barrier to Bitcoin’s advancement in price before $12k (we’re not even in the realm of either and the RSI appears to be failing on the daily at the moment).
Everything that I’m seeing shows DANGER!
Disclaimer: The author is not in possession of Bitcoin and was not paid by any entity to post this article either. This article is not meant to be taken as financial advice and the author is not a licensed financial adviser. These are merely ideas and an expression of the author’s freedom of speech to express such. Trade carefully and make your own decisions based on your own research!