Bitcoin Report: Breakout Warning

By

Since our last report, Bitcoin prices continue to look bullish overall. The bitcoin economy is prospering and improving.  More upside is likely. Once the current period of low volatility is over, we may see a massive rally that could test or exceed the all-time high of $32.

Only a break below $4.73 would temporarily suspend the bullish outlook.

In our opinion, a breakout of the recent tight trading range is about to happen, possibly within the next 24-48 hours. Why? Because the bollinger bands are at historical lows right now:

If prices break above $5.2 – $5.23  and this break out is confirmed above $5.45, a big rally may happen. Ideally, $4.95 – $5  should hold as support. Mid term, only a break below $4.73 will turn our view bearish.

Monthly

As long as the November 2011 low at $1.994 holds, the upward correction can lead to a price target of $17 – $20. Because typically, Elliot Wave corrective patterns retrace 50% or even 61.8% of the preceding move. This would lead to at least 17 $ (50%), or 20.6 $ (61.8%). To date, prices have remained in the consolidation zone since the November / December 2011 breakout.

The lead Elliott Wave interpretation projects that if bitcoin prices are indeed in a major wave III up, BTCUSD will likely make new all-time highs (way) above $32. This interpretation will hold true provided that prices stay above the November 2011 low of $1.994  (red line).

DETAILED ANALYSIS
Bitcoin prices continue to coil in a narrow range.


In the weekly view, we continue to see that the anticipated breakout has not fully happened. However, the weekly relative strength index has crossed up, which is a bullish indication:


In the daily view, we still favor the “truncated flat” correction. Once BTCUSD has broken above $5.3  (down sloping turquoise trend line) and $5.45, an acceleration of the rally is likely:


The hourly view, taken May 3, is a bit outdated. In fact, a breakout to the upside happened as predicted in the hourly chart. Thus we see that the rise from $4.73  is impulsive (5 waves i-ii-ii-iv-v) and the late April move is corrective (3 waves a-b-c). This is why we are seeing a higher probability for a continued rally.

Very short term, we seem to be in a bull flag and the most likely resolution is UP. This is why speculators could be bullish at current prices in anticipation of the break out from the bull flag. It is also a bullish sign that the recent retest of the $5  mark has held.


We summarize:

Resistances
(i) 5.3 – 5.45 $ (medium)
(ii) 7.22 $ (strong)
(iii) 9.5 – 10.5 $ (medium)
(iv) 17 $ (50% Fibonacci retracement, minor)
(v) 20 $ (psychological level and close to 61.8% Fibonacci retracement, strong)
(vi) 31.89 $ (all time high, strong)

Support
(i) 4.95 – 5 $ zone (massive, psychological level and EMA 50, tested again today successfully)
(ii) 4.7 – 4.85 $ (strong)
(iii) 4.3- 4.4 $ (very strong: 200d simple moving average, previous 4.3 $ low)
(iv) 2.6 – 3.86 $ (MASSIVE, broad zone, see above channel discussion)
(v) 2.04 – 1.99 $ (strong)
(vi) 1 $ (psychological)

Bitcoin: Gold 2.0

Bitcoin continues to outperform Gold.

–S3052

Disclaimer: This article is not investment advice. This article is an example of what paid subscribers receive. Bitcoin could become one of the best investments in the financial world, but there are significant risks involved related to Bitcoins and, like other financial assets, it is possible to lose money. Always do your own due diligence, and consult your financial adviser before doing any investing. Long-term trading success or positive investments require accepting errors and uncertainty if one wants to forecast probabilities in the future. S3052 owns and trades bitcoins. Never invest unless you can afford to lose your entire investment! @BitcoinAnalyst

S3052 is a bitcoin analyst and the editor of bitcoinbullbear.com.

Tags: , , , ,

| Print This Post Print This Post