BitcoinPrice Analysis

Another New All-Time High – Where Is Bitcoin Price Headed?

By October 29, 2017 No Comments
It's a tricky time in the bitcoin market. SeqWit2 is looming, institutional money is pouring in. and bitcoin just made a new all-time high. Let's analyze the long term trend and see what the charts are telling us

It's an exciting and tricky time in the bitcoin market. SeqWit2 is looming, institutional money is coming. and bitcoin just made another new all-time high. Let's analyze the long term trend and see what the charts are telling us

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.

Just As We Predicted

Just as we predicted, the series of higher lows and higher highs after the deep post-gold-fork retracement kept the bullish trend intact and despite conflicting signals from a technical indicator divergence and SegWit2 discord spooking the market, bitcoin soared to a new all-time high this afternoon (Oct. 29th) of $6299.

Deep Retracement Strategy

In the chart below, which we originally published on Oct. 25th, the market had retraced beyond the 62.8% level after the gold fork and we recommended a cautious entry strategy.

In a strong uptrend, a quick bounce from the 38.2% or 50% retracement level offers a relatively low-risk, high-probability entry point to ride the trend.  A 61.8% retracement or beyond, however, is a signal to exercise extreme caution, as a trend reversal could be imminent.

So our recommendation at the time, which turned out to be very profitable, was after the higher low of Oct. 25th, to wait for a higher high above the 50% retracement level of $5645 to initiate a long position.  Bitcoin is now trading at $6186, after hitting a new all-time high of $6299.

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

another great call: 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

The Technical Naysayers Got it Wrong

Many technical analysts pointed to the negative indicator divergence shown in the chart below as a sign that the market had put in a "double top" indicating an imminent trend reversal.  They made this call because the market put in a lower high of $6000 after the $6189 high of Oct 25th, and both the RSI momentum indicator and the money flow index failed to reach a higher high to correspond with the peak price of $6189.

The Smart Money Follows The Long-Term Trend

It's easy to make errors like that when you focus so intently on short-term-technical indicators that you lose sight of the long-term trend.  As our analysis below clearly shows, the yellow trendline, following the long term uptrend which began at the low of $2975 on Sept. 15th is still intact, despite the bearish indicator divergence.

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

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

Conflicting Signals

The smart money always follows the long term trend and we would exercise extreme caution in betting against that trend when there are conflicting signals.  In this case, our strategy proved remarkably prescient.

The negative technical indicator divergence of RSI an MFI was cited by many analysts as a sign of a "double top" - predictive of a new downtrend.  They were wrong. chart: coinigy.com

the smart money follows the long-term trend.  The negative technical indicator divergence of RSI and Money flow was cited by many analysts as a sign of a "double top" - predictive of a new downtrend. They were wrong. chart: coinigy.com, technical analysis: digitalassetuniversity.com

$8196 Bitcoin?

How high could it go?  Nobody can predict that.  But the bitcoin market does tend to follow mathematically predictable Fibonacci wave patterns pretty reliably, so there are major and minor Fibonacci levels that can give us a good idea of future price targets.  The chart below shows that after putting in a new high above $6200, the 161.8% Fibonacci price target based on the long term trend is a whopping $8196 target for bitcoin.  It's definitely going to be a wild ride.

Based on the long-term uptrend, the next major Fibonacci target of 161.8% is at $8175.  chart: coinigy.com

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

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