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Bitcoin Price Analysis – 27th May

1In terms of dullness and inactivity, bitcoin price action this week was markedly better than last week. After Tuesday’s dip down to $229 to test weak hands (longs) and trigger stop losses, prices have been went up for a while, peaking at $243 on Sunday. Since then, declines over the past 2 days, seemingly resemble what happened 2 weeks ago – price touched $249 and subsequent $245.

“It looks like this bull market is in a “measure twice; cut once” advance mode. As in before it advances it has to hit the previous level of support to make a climb past the next level of resistance.”

2After last week’s bitcoin price analysis, price ran up to retest resistance at $ 240 zone; on the way up, it cut above EMAs on different time intervals : 30D, 50D, 100D and 200D – on 6 H time frame charts. Interestingly, just like 2 weeks ago, when punching above 200D did not hold, culminating in a drop below all EMAs to $229, this weeks move did not hold as well and, is hanging on the edge, ripe to break. EMAs have tightened and converged around $236 zone. Lower price levels were rejected, evident from candlestick wick.

3It is not a coincidence that the market has been wobbling around this zone. When fibonacci retracement are drawn from $166 bottom to a peak at $ 315, the price range now is observably clear. Caught up between two retracement levels – upper resistance $240 and lower support $220 since April 11. Converging exponential moving average lines have reinforced resistance levels on the daily, right around where market is struggling to break up ie $240 zone.

Since finding a bottom at $213, EMAs have offered support for higher highs and lows on the up. Despite this, volumes have been declining ever since $315 peak in February and continue to thin. Bitfinex weekly volumes for instance, have been under 100,000 for 2 subsequent weeks. Over the last 8 months, this has only happened 2 other times.

4Overall, zooming out shows a larger triangle occurrence, that could close in about a month.

Bitcoin Fundamentals

Bitfinex made headlines after a successful hack on one of its hot wallets, used for bitcoin deposits. The exchange took a hit of 1301.9313 BTC, representing about 0.5% of user’s deposits. Via an announcement on its website, they admitted fault and communicated a decision to absorb the loss while reassuring customers their passwords and deposits were secure.

Although this incident is unfortunate, its scale is small and will be fully absorbed by the company.”

Bitgold, blockchain startup, acquired a leading Gold payment startup for CAD $ 52 million. According to an article by Bitcoin magazine, BitGold intends to facilitate digital gold payments via the blockchain in what has been termed ‘Gold 2.0’.

Sidenote

5This week litecoin was a pleasant surprise as its price shot up from 1.479 to 1.989; a 35% increase on Friday. I just wonder if BTC prices are now following LTC price action for now as, traditionally, bitcoin leads LTC prices.

Bitcoin Price Forecast

This week, I am still bullish on my short term expectations, however, with caveats and caution. Looking back at this image from my previous analyses, I have been tracking several price points as significant for price movements. For good measure, we can observe the conviction of this move from how it responds to these points. Rejection? or break?

6

Firstly, given higher lows and higher highs in the recent past, I see this trend continue upto to targets of $250 as a first, then possibly $267/$270 thereafter (if we make it that far). Price has been creeping up a support line from $166 bottom,and so far it has held, albeit at times weak

So it looks to hit $235 and then slowly climb above $245 only to fall down to $240 and then up to $250

7This chart from chessnut shows what to expect in the coming week/or at some point. It asserts the market is in an A-B-C corrective wave, within leading diagonal; in this case,poised to break up, but not before a retest of a low. Possibly $230, $228 or even a retest of $226. For the leg up, support will have to be found in this range for a thrust up.

Secondly, watch $228 level keenly. Stop hunting is a thing. Like last week’s low at $229.

Convincingly breaking $225 support would invalidate this forecast.

8Finally, In the mid-long term, I am bearish. Putting aside my short term forecast for higher prices, I expect downward bear trend to resume.

Trading is really about controlling your emotions once you have a target, invalidation points and a forecast of expected price movement. The market may prolong and exhaust, but as long as levels hold, there is no reason to exit.

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