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The online (cryptos) and offline (Gold) commodities have been doing well in 2017:
Cryptocurrencies have been in a massive bull run since the beginning of this year growing mulitples of their value.
Bitcoin grew more than 400% during 2017.
Litecoin’s value moved from $4 to over $60 since April 2017.
Although Gold and Silver have not grown as much, they are showing +13% and +6% trackrecords this year.
Both Gold and Silver could end 6 year corrections if they break above $1300 and $17.50.
Time for a closer look what to expect next in the upcoming weeks and months on Gold and Bitcoin. This article focuses on the latter. (The video of this article is at the very bottom)
Bitcoin Heading Towards $5000
The Cryptocurrency market is very volatile and offers little historical track record when compared to the rest of the financial markets. For instance, historical resistance levels are not available and support levels have hardly been tested.
However, Bitcoin is in a tremendous bullish impulse and the size of the momentum itself could be sufficient to keep the instrument on this trajectory for a while. Our analysis will therefore only focus on the short-term expectations and not look forward too much.
Here are the most important observations regarding technical and wave analysis:
The short and long-term moving averages are bullish (blue) color, aligned (short is above long), and growing away from each other, which is indicating that short-term momentum is more bullish than the long-term.
Price has reached the -100% Fibonacci target of the first move up this year (purple Fib).
Waves 3 can easily extend towards the -161.8% Fib target at around $5500.
The internal wave 3 seems to be building 4 which respected the 38.2% Fibonacci level.
BTC/USD Bullish Bounce or Breakout
Here are the main conclusions for the upcoming days and weeks:
Price is not expected to break below the 61.8% Fib at $3191 otherwise it make the wave 3 (orange) pattern less likely.
The wave 4 (orange) is invalidated if price breaks below the top of wave 1 at $2739 (black line).
A wave 4 bearish retracement (red arrows) should find support at the purple line or green box within the bullish momentum.
Bitcoin could be building an ABC correction (light red) within wave 4 (orange), which could go back to and find support at $4000-$3700.
Now it’s time to discuss targets and breaks:
A break above the previous top at $4460 and resistance trend line (red) confirms the wave 5 (orange) breakout towards the -27.2% target and round level at $5000.
The BTC/USD breakout is confirmed once a decent size bullish daily candle closes near the high.
The 2nd target is the -161.8% Fib target at $5500.
This potential break to the upside is a short-term trade setup but seems quite likely and possible. How BTC/USD will respond to the $5000-$5500 zone remains to be seen.
This is an entirely different question that needs to address the Bitcoin value and fundamental picture too. How Bitcoin could move in the intermediate and long-term is a question we will address in a seperate article.
Heiken-Ashi Guide & Tools
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