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Bitcoin Price Analysis: Watching World Events and “3 Pushes to a High”

BTC-USD is up 160% in the 6 weeks since it last bottomed out at around $1800. The $2850 growth marks the sixth week in a row of new highs and aggressive bull runs as bitcoin sits upon its current all-time high in the $4600s. One can’t help but wonder where the top of this run lies; Goldman Sachs is calling the top of the bull run at around $4800.

Historically, during times of war and political uncertainty, investors tend to seek financial safe havens in precious metals and other long-lasting, stable investment vehicles. Yesterday, North Korea made an aggressive move toward Japan by launching a missile over Japanese airspace. Within hours of the news hitting the public, Bitcoin saw massive price growth, thus establishing, once again, a new all-time high:

Figure 1: BTC-USD, 6 Hour Candles, Bitfinex, Volume Spike Post-news Release

After an entire week of decreasing volume, BTC-USD saw a spike in buy volume once the news of North Korea’s aggression hit the public. This is one of several bullish moves in the recent series of news events following North Korean aggression. As of the time of this article, Japan has yet to formally respond to this act of aggression, and one can speculate that bitcoin will likely continue to see price growth as the political uncertainty continues to grow.

On the macro scale, Bitcoin is showing signs of bullish exhaustion despite the push to greater highs:

Figure 2: BTC-USD, 1-Day Candles, Bitfinex, Signs of Bullish Exhaustion

Although there is a good argument for Bitcoin price growth on just fundamental analysis of the North Korean situation alone, it’s important to remain objective in our analysis. There are three signs of bullish exhaustion in the macro trend of this BTC-USD market.

Although Bitcoin is making new price highs, on the 1-day candle trend the RSI is failing to make a new high (shown in yellow) — this activity is called “divergence” and shows a decrease in bullish momentum. Additionally, although the 6-hour volume made a significant impact on the market, the 1-day volume is currently failing to make any significant impact on the overall trend (shown in blue).

Lastly and most significantly, the 1-day Bollinger Bands (shown in pink) have begun to go completely horizontal and are now beginning to actually curve downward.

The current Bollinger Band trend accompanied by the bullish momentum loss is pushing BTC-USD into a potential reversal pattern known as “Three Pushes to a High.” Basic characteristics of this pattern are:

Narrowing Bollinger Bands upon the advance of each high;

Momentum loss on various indicators;

Continued divergence across all three highs.

Currently, the “Three Pushes to a High” reversal has yet to be confirmed and is certainly not in a tradable condition, but it is something that every Bitcoin trader should consider on the macro trend of this market.

Since the run from $1800, well established Fibonacci Retracement lines have revealed themselves on the market:

Figure 3: BTC-USD, 6 Hour Candles, Bitfinex, Macro Support Lines

 

There is very strong support on the 23% line, as the market consolidated for about a week at those values. If our current price level proves to be the top of this run, a possible retracement might occur. Should a retracement occur, Figure 3 will be an important reference in order to see, on a macro scale, where the support levels lie and where potential market entry and exits will exist.

 

Summary:

Uncertainty surrounding Japan’s response to North Korean aggression reveals investor interest in Bitcoin;

Technical indicators show the market is possibly approaching its top on the macro-trend;

Support lines exist on the Fibonacci Retracement values shown in Figure 3.

 

 

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About Satoshi Nakamoto

Satoshi Nakamoto is my pseudo identity i used to design bitcoin and create its original reference implementation. As part of the implementation, i also devised the first blockchain database. In the process i also solved the double-spending problem for digital currency.

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