After reaching an ATH of $1740 then pulling back 2%, Bitcoin’s price keeps on rising. The current all time high is at $1794, and a potential head and shoulders formation might be forming which could push the price even farther up. With recent news that the Japanese volume is real, it seems that nothing can stop Bitcoin right now.
Looking at the latest price chart from Bitcoinwisdom an interesting patters seems to be forming. To be more specific, it looks like a head and shoulders formation is in the works. It is believed that the head and shoulders pattern is one of the most reliable trend reversal patterns. According to investopedia:
“It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.”
While the pattern itself hasn’t formed yet, check out this chart to see what the price would look like if it does:
The head and shoulder pattern has been relatively reliable during this rally, in a previous article we pointed out a reverse head and shoulders, which signaled a further price increase and didn’t disappoint. Keeping this reliability in mind, along with the decreased volume in the past day, traders should be watching the market carefully as a correction may be coming soon.
Furthermore, taking a look at the current dropping RSI, we can see that the market is no longer overbought since the indicator is under 70.
If the fuel (volume) for the rally keeps dropping, we may see the price test support at the $1740s level, if support isn’t strong enough then the price may start plummeting. However, we may not see much action until May 15th, which is when the SEC will decide once again whether Bitcoin can be an ETF. After denying it the first time 2 months ago, and sending the price plummeting down over 30%, it is important to keep an eye for any statements from the SEC either on or before May 15th.
Last but not least, the good news is that Japanese exchanges have in fact confirmed that the Bitcoin volume during this rally was real. During an interview with Bitsonline, Mike Kayamori, CEO of QUOINE – one of Japan’s largest exchanges – said:
“At QUOINE, we are charging fees on all trades other than spot trading of BTC/JPY. Every other currency pair, as well as margin trading, there is a fee. And our spreads are quite large, hence our volume is actually lower in April/May than it was March.”
Unlike OkCoin and BTCC which used to not charge any trading fees, Japanese exchanges can’t inflate their volume by trading against each other. Furthermore, Kayamori said that Japanese exchanges “are more conservative as we are all going through the JP-FSA registration right now.”
Speaking of China, according to a Chinese blog Caixin, the PBOC might soon issue “Notice of Administrative Punishment” to OKCoin, Huobi & BTCChina. While some may see it as a tactic to push Bitcoin’s price farther down, others see it as the end of China’s withdrawal suspension for exchanges in the country. As official regulations and details regarding AML compliance will be drafted by June, it seems that Bitcoin may see more positive momentum once withdrawals resume.
Dislaimer: This is not trading advice, this article is for educational purposes only. If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.