Bitcoin Price Analysis: Still More Room at the Top, For Now

While many fear BTC-USD is entering bubble territory, others are calling for even higher price targets.  Politics aside, there is a clear push for higher BTC-USD prices and it’s creating market uncertainty.

Here are the facts:

1. 30 days ago, BTC-USD was $1800.

2. Today the price of BTC-USD has risen 130% and has managed to establish an all time high at $4300.

3. In 5 days alone, the price of BTC-USD has increased its market value by 30%.

Taking a look at the macro trend since the rise post-$1800s, we see clear lines of support along the Fibonacci Retracements:

Figure 1:  BTC-USD, 6-Hour Candles, Bitfinex, Macro Fib. Lines

Across the length of the bullish push from the $2700s (the 61% line) there are signs of sustained momentum in the RSI and MACD.  Looking at the volume profile, there is no clear decline in volume and it appears to show market interest in higher values as the volume’s moving average has remained mostly flat.  However, since the bullish push from the $3200s (the 38% line) we can see signs of bullish exhaustion in the form MACD and RSI divergence.  

Zooming in on a smaller timescale, we see evidence of a higher push to new all time highs:

Figure 2:  BTC-USD, 1-Hour Candles, Bitfinex, Potential Bull Pennant Breakout

At the top of BTC-USD’s strong run from the $3200s stands a classic bullish continuation pattern called a “Bull Pennant.”  The pennant is characterized by price consolidation within a convergent pattern and has decreasing volume throughout the length of the pennant body.  To accompany this pattern is a 1-hour RSI and MACD that began to consolidate toward its centerline.

At the time of this article, BTC-USD appears to have broken out of this pennant with a sharp increase in volume.  Currently, based on typical price projections for Bull Pennant breakouts, this pennant breakout has a price target of $5000.

Although this is a rather aggressive price target for this bull pennant, there are some considerations on a macro scale that should be addressed and discussed.

Figure 3:  BTC-USD, 1 Day Candles, Bitfinex, Bollinger Bands

For the fourth day in a row, BTC-USD continues to push outside the Bollinger Bands.  Historically, this sort of push has led to market pullback or consolidation.  Even on high timescales, the current 3-day candle (not shown above) is fully formed outside the Bollinger Bands and shows, on a macro scale, that the market is overbought.  To accompany this push of the Bollinger Bands, a clear decrease in volume is seen on the moving average that shows, since the rise from $1800s, there has been waning bullish sentiment.  

While there is a lot of hype surrounding BTC’s recent rise, it is paramount to remain objective and skeptical of market activity and to view the market soberly.  The price target of $5000, on a micro level seems plausible.  However, on a macro level the bullish market appears to have slightly bearish divergence.  To remain a reliable price target, the market needs to see a push to newer all time highs accompanied by increase in volume to sustain the next $800 of price movement.

Summary:

1. BTC-USD has broken out of a bullish continuation pattern called a “Bull Pennant” with a price target of $5,000.

2. On a macro scale, there are signs of bullish momentum loss in the form of bearish divergence and overbought signals on the Bollinger Bands.  

3. While the market can remain overbought for days and weeks, it’s important to keep in mind that the higher the market pushes into overbought zones, the more necessary market consolidation becomes in order to prevent a market pullback.  So far, there has yet to be any considerable market consolidation during this 130% rise.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.