Bitcoin Technical Analysis 12/25/15 – Volatility Incoming

With Christmas here and everybody sitting at home opening presents, the Bitcoin market is in a hibernation state today. With diminished volume after the bear trap on the 20th, Bitcoin is steadily rising and showing no signs of slowing down.

Part of the recent price rise may be attributed to reuter’s recent article titled: Record highs predicted for bitcoin in 2016 as new supply halves. In that article, Daniel Masters, co-founder of Jersey-based Global Advisors’ multi-million dollar bitcoin hedge fund compared Bitcoin’s reward halving to an oil company announcing that oil production is going to be cut in half in a few months. The oil market would react with a substantial price hike, Masters further suggests that the halving hasn’t yet been counted into the bitcoin price because the market is in it’s infancy. That suggests that Bitcoin may see new highs in 2016. If Bitcoin does indeed reach new highs then that would mean that the so called bubble of 2014 wasn’t really a bubble and that is when Bitcoin may see the moon with prices soaring in the thousands.

Currently, Bitcoin is trading at $455, after testing support at $440 the market is ready to retest $460. Looking on tradingview, it seems that most traders are bearish. Cryptogamblr from tradingview showed a support and resistance band and pointed out that a 2 year S&R band is hard to break, further suggesting that $460 is going to serve as resistance once more before the anticipated bubble around Spring of 2016.

support-resistance-band-bitcoin-1225

source: https://www.tradingview.com/chart/BTCUSD/B1vO45Yh-BTC-1W-view-of-massive-S-R-band/

A 2 year S&R band will not break easily. I noticed some similarities around the band with what is happening recently and I like the idea of taking the chart from the spring/summer of 2014 and reversing the fractal to predict the future movement.

Combine this analysis with natural swings in any market and the coming slow holiday period (Chinese New Year) and I think there is an excellent chance we will see the 300’s again (possibly the low 300s) before finally breaking out into the next bubble in the spring of 2016.

modified-schiff-1225

On the upside, afbitcoins from tradingview mapped a modified schiff fork – a technical indicator that uses three parallel trendlines to identify possible levels of support and resistance – to show that the support and resistance levels seem to be obeying these lines very well. afbitcoins writes:

It looks possible there may be a price decline which paints a pattern looking like a dead cat bounce from the $500 spike . I think this will be a bear trap if it happens.

Greencheckmark on r/BitcoinMarkets pointed out that because of a 8,000 BTC increase in shorts on bitfinex, the price is destined to do something within 24 hours. He provided the following chart with the trend lines showing:

bitcoin-trendline-1225

As bitfinex’s volume slowed down and people opened new positions, a perfect recipe is created which can be the cause for some interesting market action on Saturday/Sunday. It is good to choose a position now before any potential panic ensues.

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Disclaimer:  This is not trading/investment advice.

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