by Jamie Holmes
The price of bitcoin broke to a fresh all-time high on December 16, as the market anticipates the launch of futures from the CME, following on from the CBOE’s launch last week. Bitcoin now exceeds $18,000 on the Bitstamp exchange and the cryptocurrency could easily make it to $20,000 in the upcoming days.
The launch of the futures contracts for bitcoin by the CME will attract more investors into the space and legitimize the cryptocurrency. There have been some changes over the past few weeks; initially the CME sought a margin collateral of 27 percent, but this has been upped to 43 percent ahead of their launch.
On December 18, TD Ameritrade will being to allow their clients to trade bitcoin futures, as reported by Bloomberg. JB Mackenzie, managing director for futures trading at the firm said, “Right now we are taking the same approach we did with the Cboe product, to wait and see how it goes. We want to watch that market open and become an orderly marketplace and see who the participants are in that marketplace. This is the same process we use with any new product. We want to see how the market reacts.”
The price action for BTC-USD on the daily timeframe is shown below. On December 15, the market closed above the fractal high at $17,428.42, suggesting bullish momentum will begin to intensify. Moreover, a close higher than $17,428.42 on December 16 will give further confirmation; we anticipate a long-term drift toward the Fibonacci extension level at $21,404.66, where this zone will provide some strong resistance. Therefore, we look to buy on December 16’s close with a take profit near $21,404.56.
BTC-USD (Bitstamp, Daily)
On the 4-hour timeframe, we see that a bullish saucer signal is in the making. The Awesome Oscillator has turned green in the most recent 4-hour trading session after remaining red in color for four trading sessions. Therefore, a break of the high of the current 4-hour candlestick in the following sessions will give an entry into a long position.
BTC-USD (Bitstamp, 4-hour)
The Fibonacci extension levels suggests immediate resistance just under $19,000, at $18,986.86, with further resistance at $20,319.62. Support is seen at the first Fibonacci extension level at $17,654.19.
The chart below shows the 4-hour timeframe along with the linear regression indicator for 89 periods back. The price action is currently in the middle of the channel and suggests the market will head toward the upper standard deviation bound, near $20,000, in the next couple of days. Those in long positions on BTC-USD should look to take profit near the upper channel of the indicator, as financial time series have the property of mean reversion – that is the price of bitcoin will tend to return to the mean value (the middle line of the channel).
Therefore, we expect bullish momentum to push BTC-USD away from the mean, which it is very close to currently, and test the upper limits near $20,000.
BTC-USD (Bitstamp, 4-hour)