Bitcoin's Powerful 3-Month Ascent: The New Support And Resistance Levels

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When Bitcoin and cryptocurrencies in general were hitting lows in March, I wrote about it right here to suggest that, from a technical analysis view, a bottom might be forming. Now, 3 months later, it looks as if that interpretation of chart price patterns proved to be correct.

The New York Stock Exchange Bitcoin Index began to rally shortly afterwards and last week approached the 10,000 level -- almost a triple for those who may have had the wisdom or luck to have purchased in the 1st quarter of the year. I don't have extensive knowledge of the fundamental stories behind cryptocurrencies nor related topics such as blockchain, but I do know how to read a price chart.

Looking simply at trend, support and resistance, here's how bitcoin looks now on the daily chart:

NYSE Bitcoin Index daily price chart.

stockcharts.com

The powerful upward thrust from the early year lows is losing force here. That can be seen from the negative divergences on the relative strength indicator (RSI) above the price chart and on the moving average convergence/divergence indicator (MACD) below the chart.

If a retracement takes place then the buying that came in at around 7000/7250 in mid-May could be a target, short term anyway. From a technical analysis standpoint, a close or 2 below the Ichimoku cloud might indicate change of direction.

Here's how the weekly chart looks:

NYSE Bitcoin Index weekly price chart.

stockchart.com

The long sell-off that began in late 2017 and continued through all of 2018 finally ended as the price climbed above the downtrend line in early April of this year. The target might be the 11000 level where intense selling showed up in February/March of 2018. On the other hand, a break above the Ichimoku cloud at about the same levels might ignite bulls further. It could be quite a battle at the price levels just above where bitcoin sits right now.

Here's the monthly chart:

NYSE Bitcoin Index monthly price chart.

stockcharts.com

The upside target here is that 19,000 level achieved in late 2017 and from which bitcoin backed off significantly. You can see that the moving average convergence/divergence indicator (MACD) below the price chart is signaling a change of direction based on its monthly components. The longer-term chart also shows how the price charged above the downtrend line in April -- after many months of selling, including 6 straight red candlesticks.

Here's the point and figure chart that clearly shows the extent of the selling into the late 2018 low and the strong buying since then:

NYSE Bitcoin Index point and figure price chart.

stockchart.com

What I like about this different kind of look is that it's hard to miss how far down the selling in bitcoin took the price and then how powerful the buying has been since the bottom. Point and figure charts were developed by commodity traders before the advent of computers and algorithms -- but I think it's useful to see how bitcoin movement looks from this perspective. You get a sense of the volatility of the cryptocurrency that might not be as apparent from the other chart techniques.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you're an investor, you'd want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

 

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Getty

When Bitcoin and cryptocurrencies in general were hitting lows in March, I wrote about it right here to suggest that, from a technical analysis view, a bottom might be forming. Now, 3 months later, it looks as if that interpretation of chart price patterns proved to be correct.

The New York Stock Exchange Bitcoin Index began to rally shortly afterwards and last week approached the 10,000 level -- almost a triple for those who may have had the wisdom or luck to have purchased in the 1st quarter of the year. I don't have extensive knowledge of the fundamental stories behind cryptocurrencies nor related topics such as blockchain, but I do know how to read a price chart.

Looking simply at trend, support and resistance, here's how bitcoin looks now on the daily chart:

NYSE Bitcoin Index daily price chart.

stockcharts.com

The powerful upward thrust from the early year lows is losing force here. That can be seen from the negative divergences on the relative strength indicator (RSI) above the price chart and on the moving average convergence/divergence indicator (MACD) below the chart.

If a retracement takes place then the buying that came in at around 7000/7250 in mid-May could be a target, short term anyway. From a technical analysis standpoint, a close or 2 below the Ichimoku cloud might indicate change of direction.

Here's how the weekly chart looks:

NYSE Bitcoin Index weekly price chart.

stockchart.com

The long sell-off that began in late 2017 and continued through all of 2018 finally ended as the price climbed above the downtrend line in early April of this year. The target might be the 11000 level where intense selling showed up in February/March of 2018. On the other hand, a break above the Ichimoku cloud at about the same levels might ignite bulls further. It could be quite a battle at the price levels just above where bitcoin sits right now.

Here's the monthly chart:

NYSE Bitcoin Index monthly price chart.

stockcharts.com

The upside target here is that 19,000 level achieved in late 2017 and from which bitcoin backed off significantly. You can see that the moving average convergence/divergence indicator (MACD) below the price chart is signaling a change of direction based on its monthly components. The longer-term chart also shows how the price charged above the downtrend line in April -- after many months of selling, including 6 straight red candlesticks.

Here's the point and figure chart that clearly shows the extent of the selling into the late 2018 low and the strong buying since then:

NYSE Bitcoin Index point and figure price chart.

stockchart.com

What I like about this different kind of look is that it's hard to miss how far down the selling in bitcoin took the price and then how powerful the buying has been since the bottom. Point and figure charts were developed by commodity traders before the advent of computers and algorithms -- but I think it's useful to see how bitcoin movement looks from this perspective. You get a sense of the volatility of the cryptocurrency that might not be as apparent from the other chart techniques.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you're an investor, you'd want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

 

My Marketocracy work is profiled in The Warren Buffetts Next Door: The World's Greatest Investors You've Never Heard Of by Forbes Investments Editor Matt Schifrin. I'm a...