In this article, we want to give you an overview of the Bitcoin evolution as the market instrument.
In its brief trading history from 2012, Bitcoin went form a $600 trading range, to for all of the participants, unbelievable almost $19000 trading range! Most of the market participants are not used to these price behaviors for any of the asset in the market. Recently it was extremely hard to trade the instrument because of its heavy pricing and amazing parabolic uptrend which has reached the apex and exhaustion in Dec ’18.
Looking at the technical analysis perspective on a monthly chart, when we spread the Fibonacci retracement, we can see that the instrument is now between 76.4% and 50% of the retracement. The strong resistance now is 5500 level from where we have a bounce after almost six months of fall. Candlesticks price action so far is giving us the bullish kicker candle, but we need to wait for the month end to confirm such a pattern. Since this is coming in the middle of the extreme range all the bulls should be careful with it. You have an example of a  bullish kicker candle below the Bitcoin monthly chart.
All the market participants maybe were not aware at some point of time that this is a trading instrument as any other. A parabolic uptrend was about to end after reaching almost $20600. Measuring it from the highest peak in the lower range at the beginning of the trading, $1615 level that has been reached in Mar ’17, it was a $19140 rise or 1234% in 41 weeks! Those market participants that bought the Bitcoin earlier and for a good bargain price, or extract it with mining, must have been aware that this kind of a price increase is not normal and they started selling the instrument. Of course, the counter side started to buy and a lot of them lost the huge amount of money in this trade. This should be a warning to all of the aspiring buyers who are hoping that the instrument would reach again at least $17000 to pull the plug.
From a technical analysis and trading perspective what is real now? Certainly not big trading ranges we mentioned and that can be seen on the weekly chart below. This weekly chart is also indicating a possible bullish continuation but only in the case of a daily close above the $8570 level. It is a (55) weighted moving average level (green line) which we are using as an indicator of the trend direction and a possible resistance for the short-term and the long-term charts.
We have used our top-down trading technical analysis to find out what can we expect in the coming days? Looking finally at the daily chart the instrument is now reaching the key zone for another upside swing. It is a $8500 – $9330 zone. 200 SMA (blue line) is coming at $9330 level and that is the most important level to watch in the coming days if it is about to be reached of course. What is important to mention as well, is that in the case of a daily close below the $7000 level the upside swing will be invalidated and the instrument will continue downside or a sideways price action.
To summarize, please remember, Bitcoin is now a trading instrument listed in many exchanges and a Futures exchange as well and it will be an instrument of a market speculation, but we will certainly not see a 1234% swing up like we had. This is the evolution of the instrument and its price will go in smaller ranges that some of the market participants wish for. Also be aware of a hard landing in any case of a price action reversal below the $7000 level again. This article was brought to you by traders and we hope that we have managed to cool of aspiring bulls in a chase for big profits. That chapter in this instrument seems to be over.
Happy trading! (click on the chart to enlarge it)
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