BitcoinPrice Analysis

Bitcoin Breakouts Are Accelerating – Don’t Get Spooked

By October 31, 2017 No Comments
As bitcoin breakouts accelerate, the price swings are getting wilder. Here's how not to get spooked by the wild price swings - stay calm and trust the math.

As bitcoin breakouts accelerate, the price swings are getting wilder. deeper, faster and scarier. Here's how not to get spooked by the wild price swings - stay calm and trust the math.

Disclaimer:  The information in this blog represents the opinions of its author and is for educational purposes only.  It is not intended as investment advice.  The bitcoin market is extremely risky so you should only invest money you are willing to lose.

Halloween Surprise

Bitcoin was making new highs in reliably predictable Fibonacci wave patterns about every 8 days so it was a nice halloween surprise when it hit another new high of $6420 today after news that the Chicago Mercantile Exchange, which trades more than 16 million derivative contracts daily, plans to launch bitcoin futures in the fourth quarter of 2017. chart: coinigy.com.  technical analysis: digitalasssetuniversity.com

Bitcoin was tagging new highs in reliably predictable Fibonacci wave patterns precisely every 8 days so it was a nice Halloween surprise when it hit another new high of $6420 today after news that the Chicago Mercantile Exchange, which trades more than 16 million derivative contracts daily, plans to launch bitcoin futures in the fourth quarter of 2017. chart: coinigy.com. technical analysis: digitalasssetuniversity.com

We reported in this blog just 2 days ago that a tsunami of cash in the form of institutional money was headed for the bitcoin market. The news broke today that the CME, which trades more than 16 million derivative contracts daily, plans to launch a bitcoin futures contract.

Predictable Advances

The CME news caused bitcoin to rocket past the previous high of $6299, set just 2 days ago, to a new all-time high of $6420.  Prior to this dramatic price surge, bitcoin had been making predictable Fibonacci-wave pattern advances to new highs precisely every 8 days - on Oct. 13th ($5869), Oct. 21st ($6189) and Oct. 29th ($6298).  So it was a nice surprise when bitcoin made yet another new high just 2 days later at $6420 on Halloween.

Ignore The Trend at Your Peril...

The chart below, from our October 29th post, shows that we have consistently recommended entering long positions at low-risk entry points during the long uptrend that has remained intact since the low of $2975 on Sept. 15th.  If you choose to trade against the long term trend, you do so at your peril.

when everyone else is focusing on short-term technical indicators, it pays to look at the long-term trend.  chart:coinigy.com

if you choose to trade against the long term trend, you do so at your peril. chart: coinigy.com, technical analysis: digitalassetuniversity.com

The Price Swings Get Wilder

As the rate of new highs accelerates, the price swings get wilder, so it takes more and more discipline to stay calm and trust the math, which is the smart way to trade.

The chart below shows the relatively low-risk, high-probability strategy of trading off a 38.2% Fibonacci bounce in a strong uptrend, a trade we recommended.  Watch how the trades get trickier as the price swings accelerate in speed, depth, and time.

See the quick bounce off the 31.8% retracement level at.  this is a relatively simple, low-risk, high probability swing trade in a strong uptrend.  chart: coinigy.com, technical analysis: digitalassetuniversity.com

See the quick bounce off the 38% retracement level on Oct 18th? this is a relatively simple, low-risk, high probability swing trade in a strong uptrend - watch how the trades get a lot trickier as the price swings accelerate. chart: coinigy.com, technical analysis: digitalassetuniversity.com

Deep Retracement Strategy

In the next chart, which we originally published on Oct. 25th, the post-gold-fork market had put in a deep retracement, beyond the 62.8%, and we recommended a cautious entry strategy, waiting for a higher high above the 50% retracement of $5645. 

After the bitcoin gold fork, bitcoin price dropped all the way below the 61.8% retracement.  This is a risky entry point because of the downside risk with no support levels in sight, so a better strategy is to wait for a higher low and a higher high above the solit support level of the 50% retracement at 5645 before taking a long position. chart:coinigy.com

after the bitcoin gold fork, the deep retracement beyond the 61.8% level warranted a cautious strategy of waiting for a higher low followed by a higher high above the 50% support level of $5645 before entering a trend-following long position. chart:coinigy.com, technical analysis: digitalassetuniversity.com

This turned out to be a great call, as bitcoin advanced over the next 4 days to 2 higher highs, first $6299 on Oct. 29th, then $6420 on Oct. 31st.

Next Entry Point?

Each new high will be accompanied by a retracement, and finding the right entry point requires discipline and calm while everyone else is panicking.  Stay calm and trust the math to pinpoint a retracement level for a low-risk entry point.

The Chart below shows the likely retracement levels after the new high of $6420 which bitcoin tagged today.  If it bounces off the 38.2% level at $6020 and starts rising, that's a good time to jump in.  After a retracement of 50% or greater, however, we would wait for the market to put in a higher low and a higher high above a major support level.  Recall that $5774, the 61.8% retracement of this rally, is the same as the 38.2% retracement of the previous rally, so it should offer major support.  Extreme caution is warranted below this level.

wilder price swings make it psychologically more difficult to stay calm and trust the math.  The smartest strategy is to wait for a high-probability entry to a swing trade at a fibonacci retracement level. chart: coinigy.com, technical analysis: digitalassetuniversity.com

wilder price swings make it psychologically more difficult to stay calm and trust the math. The smartest strategy is to wait for a high-probability entry into a swing trade at a fibonacci retracement level. chart: coinigy.com, technical analysis: digitalassetuniversity.com

Long-Term Outlook

How high could it go?  Nobody can predict that.  The accelerating rate of new highs and today's astonishing price level of $6420 warrant an upward revision of our price projection based on the Fibonacci math.  The chart below shows a major Fibonacci target of $8543.  Strap yourself in for a wild ride.

based on the long-term uptrend, the next major fibonacci target of 161.8% is at $8196. chart: coinigy.com, technical analysis: digitalassetuniversity.com

based on the long-term uptrend, the next major fibonacci target of 161.8% is at $8543. chart: coinigy.com, technical analysis: digitalassetuniversity.com

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