Bitcoin: USD/BTC (BTC=X) could test key resistance above $8,500 in the next day or two
Bitcoin (BTC) logged the biggest single-day price gain in five weeks on Monday, opening doors for a stronger recovery rally to key resistance above $8,500.
The top cryptocurrency by market value bounced up from a historically strong 100-week MA support near $7,750 and closed (UTC) at $8,205 on Bitstamp, representing a 4.47 percent gain on the daily opening price of $7,863. That is the biggest single-day price rise since Sept. 2.
Back then, BTC had rallied by 6.3 percent, confirming a short-term bullish reversal. The breakout, however, ended up creating a bearish lower high near $10,950 on Sept. 6.
Monday’s price rise could be termed as a relief rally, as the cryptocurrency was looking oversold, having dropped by more than $2,000 in the last week of September. Further, there were signs of seller exhaustion below $7,800, as discussed yesterday.
Bitcoin created a bullish outside bar candlestick pattern on Monday (above left), which occurs when the day begins on a pessimistic note, but ends with optimism, engulfing preceding day’s high and low.
The outside bar candle is widely considered an early sign of bullish reversal, especially when it appears at the bottom of an established downtrend or a notable price drop. In BTC’s case, the candle has appeared following a drop from $10,000 to $7,715.
Further, the MACD histogram, an indicator used to identify trend strength and trend changes, has crossed above zero, confirming a bullish reversal.
Meanwhile, the daily line chart (above right) is reporting a bullish divergence of the 14-day relative strength index (RSI).
A bullish divergence occurs when the RSI produces higher lows, contradicting lower lows on the price chart. It is considered an advance warning of an impending bullish move.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 9,278.93.
The projected upper bound is: 8,919.87.
The projected lower bound is: 7,295.09.
The projected closing price is: 8,107.48.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 70.4296. This is not an overbought or oversold reading. The last signal was a buy 9 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 34.78. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 2 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -16. This is not a topping or bottoming area. The last signal was a buy 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed up 3.980 at 8,158.980. Volume was 96% below average (consolidating) and Bollinger Bands were 17% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 8,177.87 9,529.58 8,589.04
Volatility: 36 55 80
Volume: 82,085 79,936 85,112
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 5.0% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of BTC= (mildly bearish). Our trend forecasting oscillators are currently bearish on BTC= and have had this outlook for the last 15 periods.