Yesterday marked another history day for the world premier Virtual Currency. Not only it recorded the post-speculative highest price level, we also witnessed most mainstream press were scrambling to cash in on the Bitcoin boom. We could still see the most media coverage ever on Bitcoin in the coming days. As the fresh bull crowded join in, is this the incentive for the bitcoin rally marching higher or inflating the market bubble or someway in between?
Some high profile media outlets or experts might claimed they have the answer. But i am not too convincing. It is no secret that wallstreet analysts acted on the benefits of institutional or big-time investors. So, word of wisdom, please do see and study the price movement on the chart yourself as well as maintain a strict money management before you jump in at this moment. No doubt, Bitcoin is real and here to stay, its evolution together with the fintech blockchain technology will be the driving force for financial industry for next few years. Yet, “What goes up must come down.” quoted by Isaac Newton. A corrective reversal direction is highly probable and definitely cannot be ruled out. So, now the ‘when’ question is more applicatory than ‘if’ in my opinion.
Beside the mushrooming in tech adoption, more fundamental bits at present are also pointing to bull bias. There are rampant of capital or cash control measures by central banks around the world. India are determined on its demonetization push. China are curbing capital outflow to fix on the wake of its biggest currency depreciation in 20 years. Bitcoin are becoming the next best alternative as proxy or arbitrage amid these ‘cash crunch’. Venezuelans flirting around Bitcoin as possible short-term salvage of their currency debacle. Other than that, bitcoin usage and acceptance is growing rapidly, more companies are accepting it as a means of payment and as form of remittances.
The BTC skyrocketed by 4.46% against US dollar yesterday capping a 3-year high on data feed from Coinbase. The price opened high on the day, trading at 849 at the time writing. The pair kept rises and moving further atop of 50-day and 200-day Moving averages. This signals the energetic bull run is eager to cover more distance. Meanwhile, the stockastic and RSI are at the max point of overbought band.
Contrary to what we pointed outs on our previous posts, the volume were picking up yesterday eventhough we expected dull tradings on the wake of the holiday which is just few days away. The long term view is still bullish. The target price before the year end is reasonably upgraded to the new level of 860. The sound fundamental is subservient to the continued bullish activity. The BTC/USD uptrend would be check in the zone before $900 if the profit-taking pressures are overturned between 860.
From the daily chart, as long as the closing prices stay above 815-816(the mid point taken from previous day candle), the immediate term rally should preserve. Still, the uptrend length could be less assured in the next few days on anticipated reduced trading activity in the holiday period. If the prices kept tapping on the top, it will retain the upward prospect and set target to pass 860.
To the downside, the support level will be around 790, double tops level. It was the previous key resistance zone and starting point of the current rally pattern. Further down, a more resilient support barrier zone of 775 should be able to interrupt any technical correction momentum.
I am seriously looking for opportunity on any corrective dips. So, i would set the setup around 775-790 level. Otherwise, any selling position around the current level but the risk should be taken into consideration as it is really on the high side.
As the Bitcoin hype showing glimpse of bubble in the past days, taking a long position at the current price look riskier than ever if you are planning a short term gains. Corrective is getting nearer as the prices move higher. And please take note, the greenback is within a long term bull trend too. But this factor are discounted to certain degrees by many Bitcoin optimists yet I hang on to my reservation.
As of now, maybe opportunities lies on Bitcoin pairing with other fiat currencies. Below I attached charts of other BTC pairs, BTC/EUR (Bitcoin against Euro) and BTC/CNY (Bitcoin against Chinese Renmimbi).
BTC/EUR Daily Chart
Euro zone is facing exceptional fundamental uncertainty in the coming year. There will be various political dilemmas in Europe with major countries(Italy, France, Germany, Holland, etc..) having election year. The viability of European Union existence will be come into question and it could take years for any conclusive outcome. The extended Quantitative easing (QE) will last till second half of next year. These capital expansion can only reduce the real value of Euro thus exposes downside risk of Euro. Furthermore, the risks associated with Brexit is ambiguous. I only got so much time to briefly touching the surface on the selected possibilities here. But there are also remote chances that things can be turn out good. But as i said, remote at best. Therefore, BTC/EUR may be a better option to buy into Bitcoin hype.
China market is actually carrying bigger weight against Bitcoin than Europe. It has 93% volume of the world BTC exchanges. China economy is in fairly health with satisfactory GDP growth. But some economists rising the mainland credit condition especially with the escalating bond yield. The capital controls coupled with devaluation of yuan could see a soaring of interests in Bitcoin in China. So, the BTC/CNY upside could be tremendous particularly if yuan value keep weakening in 2017.
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Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.