Bitcoin Weekly Analysis

Bitcoin Weekly Analysis

Bitcoin (BTCUSD) can be easily called one of the most volatile instruments if not the most volatile. From that perspective, it is easy to be surprised and even deceived by the lack of any significant activity in the instrument for the last 4-5 months. The trading range has been shrinking since the low of $6000 was hit in the month of February 2018 as the following bounces turned into a series of more feeble attempts than the previous one. The initial bounce in February-March found resistance near 11700-800 and the next bounce was arrested around $10000, which was followed by a retesting of the $6000 levels. In the last 4 months, the range has contracted to $6000-$7700 and BTCUSD may spend the next couple of weeks in this range.

This contracting range is the most difficult phase for the traders as there is no strong hint of the next directional move. The entire fall from the December 2017 high of $19891 can be taken as incomplete downmove. Check the table below. The last row is not updated on the table, which currently stands at a fall of about 71% and the number of days in correction comes to 308 days at this point of time.

The table also shows that the current drop of 71% is the already the third largest among all the historical corrections. If it extends to 83%, like the April 2013 correction, then we can expect $3400 levels and if it mirrors the November 2013-Jan 2015 correction of 87%, then we can expect $2600 levels in the next few months. It may be noted that from the perspective of duration, the current correction is the second longest with 308 days at this point.
On the other hand, technically a case may be made that BTCUSD is undergoing a bottoming out process and the major decline is over. Still, unless strong price evidence emerges in the future, one must stay with the major downtrend and the upside possibility can’t be assigned any major weightage.