Bitcoin volatility recovers after hitting 2-year low
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According to the relative volatility index indicator, BTC volatility recently tested another lowest low. Last time Bitcoin volatility was that low only 2 years ago, in October 2016. It shows an extremely strong accumulation phase, which is currently ongoing. A bullish breakout is something that most cryptocurrency investors are waiting since January 2018, when BTC/USD topped out.
Slowly, but steadily Bitcoin is approaching the point where volatility will go ballistic and perhaps this is the time when breakout will occur. Most asking the question as to the direction of the breakout, as there are many concerns regarding the future of the Bitcoin. But at the same time, there are massive amount of optimism in the entire cryptocurrency space.
Lets try to have an objective overview of the price development scenarios to be expected.
The support
On the 8th of September the uptrend trend line has been rejected, where BTC tested $6120 low. At that time it has touched the 88.8% Fibonacci support located at the same price. Obviously, since June, Bitcoin has established a strong support area between $6120 and $5858, while price has bounced off it many times..
The trend
As long as support is holding, it would be reasonable to assume that probability of the price moving up is very high. In the worst case scenario BTC/USD will continue to consolidate, extending the accumulation phase. Another point to mention is the break above the 78.6% Fibonacci resistance at $6454, as after the break above, price found there support and produced higher high on the lower timeframe.
According to our previous analysis on Bitcoin resistance has been taken out, which adds more points to the probability of an incoming uptrend. Also, Relative Volume Index indicator has reached and bounced off the lower trend line of the descending channel. And finally, RSI is about to break above the triangle pattern. Considering all these facts should help to produce a forecast with relatively high probability.
The potential
We have determined the probability of an uptrend remains very high at this stage. Therefore, upside targets have to be carefully calculated and studied. Fibonacci, applied to the downtrend trend line breakout, shows that nearest resistance is at 7k, which is 61.8% level. Along with the following 3 Fibonacci resistance levels, they should have a minor impact on the price. The strongest level of interest, that is key resistance, is seen at 9k, confirmed by 2 Fibonacci retracement levels. Slightly higher is yet another level to watch for, that is 88.6% Fibs at $9380.
The risk
As always, there is certain probability of the establishment of a downtrend. Taking into consideration recent price action, this scenario has low chance of success, although can’ be ignored. If BTC/USD will break below the $6450, price can go down to $6125 - $5858 support area. The invitation for bears would be daily break and close below the $5858, which would apply more pressure on BTC price, potentially dropping it down to 5k area.
Summary:
Now Bitcoin is looking bullish, as multiple times sellers failed to take over. Although the fight between bulls and bears continues, the probability of an uptrend is higher, as long as $6450 support will hold. The next bull run might be about to start, that can bing BTC up to 9k area. Yet, investors should have a clear strategy for exit in case of an unexpected downside breakout.
Key levels
Support: $6450, $5858
Resistance: $7000, $9000
According to the relative volatility index indicator, BTC volatility recently tested another lowest low. Last time Bitcoin volatility was that low only 2 years ago, in October 2016. It shows an extremely strong accumulation phase, which is currently ongoing. A bullish breakout is something that most cryptocurrency investors are waiting since January 2018, when BTC/USD topped out.
Slowly, but steadily Bitcoin is approaching the point where volatility will go ballistic and perhaps this is the time when breakout will occur. Most asking the question as to the direction of the breakout, as there are many concerns regarding the future of the Bitcoin. But at the same time, there are massive amount of optimism in the entire cryptocurrency space.
Lets try to have an objective overview of the price development scenarios to be expected.
The support
On the 8th of September the uptrend trend line has been rejected, where BTC tested $6120 low. At that time it has touched the 88.8% Fibonacci support located at the same price. Obviously, since June, Bitcoin has established a strong support area between $6120 and $5858, while price has bounced off it many times..
The trend
As long as support is holding, it would be reasonable to assume that probability of the price moving up is very high. In the worst case scenario BTC/USD will continue to consolidate, extending the accumulation phase. Another point to mention is the break above the 78.6% Fibonacci resistance at $6454, as after the break above, price found there support and produced higher high on the lower timeframe.
According to our previous analysis on Bitcoin resistance has been taken out, which adds more points to the probability of an incoming uptrend. Also, Relative Volume Index indicator has reached and bounced off the lower trend line of the descending channel. And finally, RSI is about to break above the triangle pattern. Considering all these facts should help to produce a forecast with relatively high probability.
The potential
We have determined the probability of an uptrend remains very high at this stage. Therefore, upside targets have to be carefully calculated and studied. Fibonacci, applied to the downtrend trend line breakout, shows that nearest resistance is at 7k, which is 61.8% level. Along with the following 3 Fibonacci resistance levels, they should have a minor impact on the price. The strongest level of interest, that is key resistance, is seen at 9k, confirmed by 2 Fibonacci retracement levels. Slightly higher is yet another level to watch for, that is 88.6% Fibs at $9380.
The risk
As always, there is certain probability of the establishment of a downtrend. Taking into consideration recent price action, this scenario has low chance of success, although can’ be ignored. If BTC/USD will break below the $6450, price can go down to $6125 - $5858 support area. The invitation for bears would be daily break and close below the $5858, which would apply more pressure on BTC price, potentially dropping it down to 5k area.
Summary:
Now Bitcoin is looking bullish, as multiple times sellers failed to take over. Although the fight between bulls and bears continues, the probability of an uptrend is higher, as long as $6450 support will hold. The next bull run might be about to start, that can bing BTC up to 9k area. Yet, investors should have a clear strategy for exit in case of an unexpected downside breakout.
Key levels
Support: $6450, $5858
Resistance: $7000, $9000
トレード終了: 利益確定目標に到達
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トレード終了: 利益確定目標に到達
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