Bitcoin Technical Analysis for 4/28/16 – Broken Stairway to Heaven

As a Bitcoin trader the price is rarely boring and stagnant, the true spirit of the free market is a volatile and an unpredictable beast. These past few weeks the price has been pretty stable, in fact it hasn’t been that stable since at least October of last year.

The price has become so steady that even the mainstream media picked up on the fact, last week the Wall Street Journal published a piece titled “Is Bitcoin Becoming More Stable Than Gold?“. On April 17th the beast has awoken from it’s month long hibernation and the market resumed to the long awaited volatility.

Reasons for the price increase

There are quite a few theories as to what caused the price hike on April 17th. One reason is the release of segregated witness code which could help Bitcoin with it’s inherent scalability issue is the main reason for the bull run. Another theory is Steam’s integration of Bitcoin to it’s marketplace, allowing millions of users to purchase games and other digital products with Bitcoin. Last but not least, the upcoming halvening of the block reward means a decrease in Bitcoin’s supply which is guaranteed to have a positive effect on the price. However, whether or not the upcoming block reward halvening has been accounted into the current price is impossible to tell.

Reasons for the price decrease

It’s no news that Bitcoin’s price has crashed to support levels with a current value of $442. A popular opinion as to why the Bitcoin market too profit is because of the recent announcement by the Fed regarding a potential hike in federal-fund rates. Federal-fund rates are the rates at which financial institutions such as banks can loan money from another financial institution. A hike in those rates means more money flowing into the US economy thus strengthening the dollar.

Traders were afraid that the Fed might release a statement raising interest rates and seemed to have taken profit prior to the announcement. Luckily the outcome of the meeting resulted in the Fed leaving the rates unchanged and having no clear response as to when the rates would increase. It seems that the market has overreacted and either overbought at the run up, or panic dumped on the crash. There is no real reason for Bitcoin to dump to or below the pre-pump levels at around $420 with all the positive news and development progress.

In addition to the potential rate hikes, quite a unique even transpired earlier today which definitely attributed to the insta-selloff. A trader on OKCoin took the wrong bet as he was margin called and was forced to close a long, costing him between $250,000 and $500,000 according to calculations made by r/BitcoinMarkets.

okcoin margin call rekt

OKCoin Trader Rekt

When a trader is forced to close a margin call, his coins get dumped on the market. Such a large order dumped on the market is sure to send panic down traders’ spines as it looks like whales are trying to exit at all costs. This is a good time to remind traders to never execute any orders based on emotion.

 

Technical Analysis

Many traders on tradingview are seeing the current prices as good potential buys as they believe the market is oversold. An interesting chart is presented by swordmaker from tradingview showing a potential bat pattern:

Bitcoin Analysis 4/28

A bat pattern is a special kind of a harmonic pattern. Harmonic patterns are formations of certain geometrical shapes in the market following very specific Fibonacci ratios. They are used to predict future price movements and are classified as leading indicators unlike most which are lagging or coincident which happen after the fact or at the same time. If the pattern plays out, Bitcoin should see a price increase back to the $470 levels, however looking at the RSI if we do not see divergence any time soon the bat may be invalidated.

On the other hand, an idea presented by zippy1day suggests that the market finished the step and stairway pattern and bearish momentum is incoming. The step and stairway pattern is created by a series of support and resistance zones which gradually move the market in the positive direction. An exit signal for the indicator is when the step fails to move upwards in a continuation, in this case zippy1day’s chart suggests that the massive selloff from $470 was the exit sign that broke down the stairway to heaven.

Bitcoin Step Stairway Pattern 4/28

This is a new one on me but saw a fellow charter suggest this and if it plays out would tie into the correction already forecast prior to this move.Target levels now $436 & $412. Looks
like the Fib Levels are spot on ……question now is how Low? $412 looks most likely in the coming hours! -zippy1day

Conclusion

It is highly unlikely that Bitcoin’s price will drop below the $420-$430 zone as there is massive positive momentum surrounding the cryptocurrency. Unless any major negative news breaks about Bitcoin, or the Fed decides to suddenly raise interest rates, Bitcoin’s price will hold. Keep an eye out for any major margin calls or any upcoming integration of Bitcoin with major companies as these are guaranteed to affect the price.

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Disclaimer: This is not trading or investment advice.

8 Comments

  1. JamesCef January 13, 2021
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