by Jamie Holmes
The price of bitcoin broke to fresh highs on October 13, breaching the $5000 handle with ease and posting a new all-time high at $5846.43. Buying interest has intensified as the SegWit2x hard fork is expected to lead to another bitcoin offshoot in November. Markets have also come to terms with recent regulatory measures in China, which could legitimize bitcoin further as a digital asset as the infrastructure to weed out illegal activities/funds is put in place.
As the first exchange to make a decision regarding SegWit2x, Bitfinex is currently leading the market in terms of volume, accounting for 15.35 percent over the past 24 hours according to coinmarketcap.com. The total volume over the past day or so has exceeded $3 billion, demonstrating the phenomenal interest in the cryptocurrency as compared to traditional financial assets. The table below compares the volumes of cryptocurrencies and popular stocks. The rising volume indicates that further price gains are to come, and puts bitcoin’s market capitalization within touching distance of $100 billion.
The 4-hour chart shows that the most recent fractal support lies at $4700, so we expect the market to try and find a new floor and establish a higher fractal. Short-term equilibrium is suggested to lie around $5338 by the conversion line (blue) and will provide entry into long positions. Notice that the market may also drift into the support zone of the Ichimoku cloud, which lies around $4992 and $5255 for October 17.
October 12 displayed the highest ever daily gain for BTC-USD with the market closing $622.99 higher than the opening price. Similarly, on July 20, 2017 we saw a similar bullish move where the market gained just under $600 in a single day. Subsequently, bulls were tempered to $2400 at which point the upward climb reignited.
Since October 12’s price action is a bullish Marubozu candlestick variant (shown below), we can use the same strategy to get into the ongoing uptrend. The 50 percent level of the green candlestick lies at $5133.51 while the base level of the candlestick at $4822.01 also provides strong support. Even if the market reverses and tests these support levels, the uptrend is still suggested to be intact.
Therefore, we place limit buy orders near $5133.51 and $4822.01. Also, the previous all-time high at $4979.20 has turned into support.
Using the Renko charts for the daily timeframe, illustrated below, we see that a breakout occurred on October 12, with a close above $4776.15. The target using this analysis lies at $6512.42. The upward move is also dragging the equilibrium higher with it, as shown by the increasing gradient of the conversion line (blue). After several days of remaining horizontal, the conversion line now starts an upward trend.
The yellow ray shows that a move below $5057.10 would be bearish and perhaps invalidate the upward trend. More certainty is given when a red Renko candle forms, which would indicate to exit current long positions and/or enter short positions.
Looking at the weekly price action, we see another Bullish Saucer is setting up, suggesting momentum may intensify even further for the week beginning October 16. For instance, notice that the Awesome Oscillator has turned green this week after four consecutive weeks of declining bars, red in color. We see in early August a bullish saucer signal was triggered, which saw the BTC-USD move from $3339.66 to $4979.90 in a matter of four weeks.
We anticipate a similar move next week if the Awesome Oscillator remains green and we get a break above $5846.43. Once the market moves above the high for the week beginning October 9, the bullish saucer signal will be triggered. Applying the Fibonacci tool to the most recent fractal resistance and the prior support, we look to target of $6926.54 over the long term once the bullish saucer is confirmed.
As noted by Bloomberg, bitcoin has been moving higher and faster. It took BTC-USD almost 900 days to break to $1,000 and did not manage to attempt the $2000 handle until May 2017. Since then, three psychological levels at $3000, $4000, and $5000 have been surpassed quite swiftly. The weekly chart above shows that the 261.8 percent Fibonacci extension level lies at $10,076.44, suggesting a break of $7,000 will be followed up quickly with an ascent to $10,000.
Swissquote, a Swiss banking group providing online financial and trading services, had already hinted at a target for bitcoin at $10,000 a while back and reiterated this in their October 13 Technical Report. Yann Quelenn, market strategist, said, “The road is wide open for further increase. In the long-term, the digital currency has had exponential growth. There is a decent likelihood that the asset will reach $10,000.”