For analysis, I want to take the period from 2 to 6 August 2018. On this day, the Coinmarketcap website recorded a market capitalization of BTC> $ 100 billion. I believe that the hype around BTC began at this time.
During this year, Bitcoin was banned and allowed, trading in derivatives started and, most importantly, institutional capital appeared on the market.
Now in order. Let's start with a technical analysis.
Lines *
- Overbought line from August 2 to December 16 2017 went up sharply. The Demand line also became steeper, and the steeper, the overbought asset. The result was a sharp correction. The big players perfectly caught the moment for unloading. But the volume was small relative to the market. Let's say that the smart money market tests were successful and earned capital for further actions.
- On December 17, 2017, the Overbought Line changed its angle, from that moment it can be called the Supply Line. On the other side of the channel, the Oversold Line is now.
- On February 6, 2018, the Oversold line changed direction and can be considered a Demand line. And here is the most interesting thing - the market is between the Demand Line and the Supply Line - i.e. in normal condition.
- 5 May 2018, the proposal increased the pressure on the market. The result of 28 in May, the state of the market turned into an oversold state, as evidenced by a change in the slope of the Demand line to Oversold.
- 29 June 2018, the market found support and demand emerged.
- July 24 The 2018 market has once again returned to normal without overbought and oversold.
Volumes
- from August 2, 2017 to December 12, 2017 - Price rises, Volume rises - Market strength
- from July 12, 2017 to February 6, 2018 - Price falls, Volume falls - Market weakness
- February 6, 2018 to March 9, 2018 - Price rises, Volume rises - Market Strength
- from March 9, 2018 to April 12, 2018 - Price falls, Volume falls - Market weakness
- from April 12, 2018 to April 25, 2018 - Price rises, Volume rises - Market strength
- from April 25, 2018 to July 1, 2018 - Price falls, Volume falls - Market weakness
- from July 1, 2018 to July 24, 2018 - Price rises, Volume rises (dramatically) - Market strength (signal)
- from July 24, 2018 to today - Price falls, Volume falls (dramatically) - (signal)
Why am I so detailed about the volume. Final conclusions will be made at the end of the review. What you should pay attention to. There is a rule on the market: “The volume that follows the market is usually bullish. The volume that contradicts the market is usually Bearish ”(I don’t like this zoo, but this is a quote). For a year, I have never seen a contradiction between prices and volume. Of course, with a detailed approximation, we find such examples on days, hours, and minutes. But this is an analysis of the full picture.
Volume profile
- The zone of the main horizontal volume (70%) - $6 - $110.
- Line of control (ROS) 8 000 $
Indicators
- Stoch RSI. From November 2017 to December 2017 marked divergence, which a week warned about things to come. So at such moments divergence at Stoch RSI for this market works.
- Stoch RSI. From 28 May to 3 August, the 2018 Indicator just goes crazy. (see also 3 daily chart)
- RSI. The same picture on the divergence. November 2017 of the year and beginning of August 2018 of the year.
- RSI. During periods when the market is strong - RSI usually does not fall below 40. When the market is weak - RSI usually does not rise above 60. (See blue horizontal lines). This is clearly seen on the 3-day chart.
Fundamental factors
3 of a day ago began a new annual cycle for the market. Over the past year, many interesting events have happened and the positive news continues to come out:
- Release Lightning Network, which made BTC competitive
- Governments try regulatory options
- CBOE and CME - one of the most respected financial institutions launched derivatives trading
- CBOE has submitted a bid to start trading BTC ETF
- An official from the SEC delivered an open letter in support of BTC
- Discussion of cryptocurrency on the main political platforms, search for ways to regulate (or just guys pay each other in the crypt)
- The appearance of regular reviews on leading financial television channels
- Final settlement with creditors mt.Gox
- Once again, I became convinced that the demand for Bitcoin is growing in countries with high inflation and a weakening economy. Last time Greece, then Zimbabwe, now the countries of Latin America.
....
And the main news on the border of the annual cycle.
Intercontinental Exchange Inc. (NYSE:ICE), the operator of the New York Stock Exchange, announced the creation of its own solution for cryptocurrencies, in partnership with Microsoft, already in November. It will be an exchange, a custody service, a cloud solution for paying for goods in stores (in partnership with Starbucks). About the latter, I note that this is not a payment for coffee with bitcoin, this is an instant exchange for dollars through the service and payment, i.e. the seller must not have a Bitcoin wallet. This solves the main regulatory problem - how to reflect Crypto assets in accounting.
SUMMARY
The market is developing as a textbook. What does the correlation between price and volume tell us?
Divergence on technical indicators says that there will be a strong movement. I tend to increase prices. Given that the divergence on a large timeframe and the market is “bullish” (see the section on volumes), this movement may be higher than the previous maximum values.
After the price low of $5778, which was observed on June 29, 2018, we saw a Higher Low twice and a Higher High once. The extremum above $8350 will be important – the second Higher High.
Against the background of positive news, big players should gain their position. What is happening now. Major players can not miss such events.
Supply and Demand Lines. The market is in a normal state without overbought or oversold. Either demand or supply. I bow to the side of Demand.
Volume. The period from June 29 to June 24 and from June 24 to today are characterized by sharp volume changes. The first speaks of a rapidly growing demand, the second of a rapidly declining supply. This can mean one thing - the big players are gaining position.
Volume profile. The line of control (ROS) in the region of $8000 is a fair price at the moment and the price will tend to this value. 200VWMA (Volume Weighted Moving Average) = $8254. The nearest target is the $8000 zone – $8254.
The profile shows that positions are taken in the range of 70%. And if the small speculator and investor are now disappointed and depressed about the price and close their positions, then the big players can afford to wait. The conclusion is obvious – the target is above $9700.
BDD (Bitcoin Days Destroyed) - this parameter has dropped dramatically (https://oxt.me/charts). This may say that the main part of the coins is without movement.
Putting it up with huge trading volumes, the conclusion is that the big players take a position and wait for some events, and in order to unload, and this will be extremely difficult, they need a good media campaign.
CONCLUSION
The nearest target is the $8-$000 zone
Medium-term goal - $9
Long-term goal> $ 20
Intraday can trade. The risk of a substantial paper loss is minimal.
Disclaimer
Everything written here is my subjective opinion. It does not constitute financial advice, advice, or a call to action.