Bitcoin Price Analysis 4th Nov

Posted by: pesa_mic

November 3, 2015

This week was an exciting week for the Bitcoin market. Price was intent on going up, making it to a top 0f $ 423 on Western exchanges, and up to $ 442 on Chinese exchanges. The last time price was at these levels was in 2014, October, before a plunge to $160 low in late January.

Bloomberg Business ran with the title – “Bitcoin Is Suddenly Surging Again, and there are various theories behind the rise”

If you have been reading our weekly bitcoin price analysis, this market action was no surprise. Here is a recap.

After consolidating at $296 last week, price resumed its upward momentum, heading up to $ 345, consolidating, and rising up to current price at $ 425. On its way up, it had to overcome exponential moving averages putting up resistance, completely turning around the short term average trend line – a parabolic trend.

$316 level, a strong resistance level from January, has repeatedly pushed down on price 3 times already, this year. Breaking the $200 – $300 range was a strong indicator of market intent. The next level of resistance dates back to October 2014, at $475 back in September 2014. Ideally, these key levels to watch on further upside. Currently, $ 400 is under upside pressure. Having broken already, it is a question of whether it holds.

On this weekly chart, all EMA’s – 30, 50, 100 and 200 day have been broken. But, it is a different outlook on simple moving averages

Here, the 30, 50 and 100 day averages lines are way below current price levels. Price just pierced above 200 day MA. Looking at 2 and previous patterns from March and July this year, it is wise to watch current 4 to see if a similar pattern unfolds. Price attempts to change trend, heads back down to retest lows and moves up stronger breaking past previous levels. Watch current level above 200 MA and whether it holds above $ 316 on expected correction down.

The 1 week chart above, shows there is still more legroom for price to move up to $ 430 at (2). (3) points to price just below 200 Moving average line. It looks vastly similar to last year March – June, where price sharply broke above all MA lines, settled on a sideways trend for some weeks and then resumed the bear trend. Caution is advised at this overbought level. 200 MA has been above the trend since February 2014 – it is a crucial level. Watch how price behaves around this average line.

BITCOIN PRICE FUNDAMENTALS

The past 7 weeks of a price rise has been fundamentally supported by a couple of theories

BLOOMBERG BUSINESS suggests mainstream financial institutions are warming up to the bitcoin blockchain – mainstream banks are launching accelerators housing bitcoin startups, even making funding rounds into Bitcoin companies – BBVA, Goldman Sachs.

“As investors realize that many of the applications will be built on the bitcoin blockchain, they eventually arrive at the conclusion that if these applications succeed the price of the bitcoin currency will go up”

Elsewhere, the devaluation of the Yuan in China, led to capital flight

“Investors pulled $194 billion from the country in September, extending this year’s outflow to $669 billion.”

Speculation on some of that cash finding its way into bitcoin has coincided with this run, and Chinese exchanges are leading global exchanges to higher price levels – as much as $ 20 above Western averages! The matter of whether is based on fact or fiction is relevant, markets are sensitive to speculation.

Finally, the European Court of Justice decision on exempting bitcoin from VAT as cash, was good news to fuel this rise. While price was well up on a run, market sentiment compounds rises – just like this one.

BITCOIN WEEKLY PRICE FORECAST

This week, I am cautious about higher prices past $430. I am ready for anything at this point, Bitcoin is wild and it can surprise all of us.But, the market is ripe for a correction, after a parabolic rise from $ 224. Indicators are oversold on all timeframes including the weekly – 3d, 1d, 12h RSI is crazy high.

This kind of move can’t be sustainable. Long term bitcoin could be anything but such a violent upturn based on pretty much no solid positive news will have to meet some kind of correction sadly. Hopefully we can stay around 330-360 though & not fall lower.

A correction with a chance of more upside sums it up.

A 2-year daily moving average sits above price at $ 425. Watch it!

Updated: 2015-11-03