Let me begin by saying, these are merely my own studies and observations. My studies are not financial advice and only meant to be used as guidance and for leisure.
PRICE PREDICTIONS
The month of July can turn out to be quite interesting and potentially set the foundation to a much larger price movement.
By end of July:
If Bulls are strong — $7,500 to $8,100
If Bears are strong — $5,900 to $5,000
There are various ways to dissect the price action data provided by Bitcoin’s Chart. Here I will try and present from both bullish and bearish perspective in an effort to remain as neutral as possible.
Bullish = Bias towards price appreciation or going up
Bearish = Bias towards price depreciation or going down
Let’s have a look at why I think so..
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But first..
LINEAR VS LOG SCALEPlease read this in order to understand the difference between Linear and Logarithmic scales:
What is the difference between a logarithmic price scale and a linear one?_The interpretation of a stock chart can vary among different traders depending on the type of price scale used when…_www.investopedia.com
Or you can refer to this Medium article that explains using Bitcoin:
Linear vs. Log Scale charts_Please read this article beforehand:http://www.investopedia.com/ask/answers/05/logvslinear.asp_medium.com
Due to the volatility of Cryptocurrencies, price action can involve monstrous moves, therefore it is paramount to look at both linear and log scale as they may present different data.
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Bitcoin Analysis on the Linear Scale
As of 3rd July 2018
BTC / USD on Linear Scale (As of 3rd July 2018)
Prior pattern before breakout: **Falling Wedge**Key Supports: $6,100, $5,900, $5,000Key Resistance: $6,800, $7,700
Falling Wedge (Reversal) [ChartSchool]_The falling wedge can also fit into the continuation category. As a continuation pattern, the falling wedge will still…_stockcharts.com
BULLISH PERSPECTIVE
From dailypriceaction.com
A falling wedge pattern is predominantly a bullish consolidation pattern. My chart analysis is based on a common price movement portrayed by the image above where resistances can be found on the previous swing highs.
The key support points would be $6,100 and $5,900 so we can expect Bitcoin to drop to these levels in the short term before making a larger move up.
Key resistances can be found at around $6,800 as it used to be a strong support zone, previously held by the bulls in April. Before a move up, bulls have to rally together, break this price zone and close ABOVE it
The Relative Strength Index (RSI) has shown a bullish divergence signalling a possible trend reversal. This indicator puts further weight on a possible bullish uptrend.
BTC / USD Weekly — Bullish Perspective (As of 3rd July 2018)
On the weekly chart, we can see that there were strong support at around $5,800 — $6,000 region, previously held by bulls on two occasions: November 17 and April 18. Bulls can assume that they have successfully defended the support zones and start a rally towards the broken weekly 50MA (above $8,100).
Weekly RSI is unfortunately below 50 which means that the potential downside is still present. However, as shown in the chart, it is curving up and ready to rest 50 again. If the bulls are able to push it above 50, it will signal a successful trend reversal.
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Bitcoin Analysis on the Log Scale
As of 3rd July 2018
BTC / USD on the Log Scale (As of 3rd July 2018)
Prior pattern before breakout: **Descending Channel**Key Supports: $6,400, $5,900, $5,000Key Resistance: $6,800, $7,700
Price Channel (Continuation) [ChartSchool]_A price channel is a continuation pattern that slopes up or down and is bound by an upper and lower trend line. The…_stockcharts.com
A descending channel is predominantly a bearish continuation pattern. However, Bitcoin has clearly broken out of the channel and is looking to retest the broken resistance line.
Currently, Bitcoin is sitting on a key support at $6,400 (as of 3rd July) as it is retesting the Channel’s broken resistance line and it can potentially move higher from here and test $6,800 once again over the next few days. A successful rally from the bulls, we shall then see Bitcoin going towards the next swing high at $7,700.
BTC / USD Target for Bulls (As of 3rd July 2018)
The Relative Strength Index (RSI) has shown a bullish divergence signalling a possible trend reversal. This indicator puts further weight on a possible bullish uptrend.
These analysis are coming from a bull’s perspective.
Let’s take a look at it from a bear’s perspective…
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BEARISH PERSPECTIVE
As of 3rd July 2018
BTC / USD on both Log Scale and Linear Scale(As of 3rd July 2018)
Here is what bears would see on the charts to support their claims and predictions.
BTC / USD — Bearish perspective (As of 3rd July 2018)
Using the daily moving averages (50, 100, 200), it is clear that we are in a bearish market. There is a saying, “Never trade against the dominant trend”. We can assume that traders will sell at every rally and at every resistances. As Bitcoin failed to break above $6,800, it is possible to see a move down towards $5,900 again before another defensive mission from the bulls.
At $5,900, there will be another battle between bears and bulls. If bears win, we can expect Bitcoin to drop towards $5,000.
BTC / USD WEEKLY CHART — Bearish perspective (As of 3rd July 2018)
On the weekly chart, we can clearly see Bitcoin retesting the broken support of April. The weekly 50MA is also clearly broken and thus, the possibility of Bitcoin dropping further to the 100MA is relatively high. Currently, the 100MA is at $4,700 moving towards $5,000 by end July.
Weekly RSI is clearly below 50 and it has quite a long way to being oversold which means that the further downside is strong. However, as shown in the chart, it is curving up and ready to test 50 again. If bears manage to repel the bulls’ efforts, the RSI will continue downwards.
BTC / USD — Hidden Bearish Divergence (As of 3rd July 2018)
Example of a Hidden Bearish Divergence
The RSI on the daily however, is showing signs of a hidden bearish divergence which could potentially cause Bitcoin to drop towards the next support line of $5,900 before another move.
If the bears is successful in using this hidden bearish divergence, we can potentially see a further drop towards $5,000.
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Conclusion and Personal Thoughts
PRICE PREDICTIONS (again)
If Bulls are strong — $7,500 to $8,100 by the end of July
If Bears are strong — $5,900 to $5,000 by end of July
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As you can read from the analysis, there are many ‘ifs’ and ‘whens’. Technical Analysis and charts uses history or ‘price memory’ to determine probability of outcome. It is NOT a crystal ball. All charts and technical analysis can provide are data used to plan out strategies when managing your portfolios.
Although I have provided a seemingly stronger case for the bulls, that does not mean it will play out that way. As an investor myself, please remember that it is natural for me to have an underlying bias towards the bulls.
Bitcoin and a majority of Altcoins are beginning to show on the charts, a shift in market sentiments, from bearish to bullish. But the world waits for a clear sign to start piling in.
‘Coinbase Custody’ Targeting Institutional Investors Now ‘Officially Open for Business’_Major U.S. crypto exchange and wallet provider Coinbase has today launched its digital assets custodian solution for…_cointelegraph.com
The whole Crypto Community have been waiting for any hints from institutions on their arrival. Coinbase Custody provides a huge sign that it could very well be sooner than we expect.
SEC Opens Up the ETF Market, Opportunity Knocks for Cryptocurrency?_After proposing to streamline the process of launching an exchange-traded fund (ETF), the United States’ Securities and…_cryptoslate.com
On the regulatory front, it is still unclear where authorities place Cryptocurrencies at the moment. Blockchain technology and its ensuing entities: Cryptocurrencies have attracted quite the attention from all sectors of the world especially since the recent price explosion in Dec 17/Jan 18. Expect the space to progress quicker than previous years. Only once regulatory clarity has been provided by governments from different countries, will we experience the next bull trend in the space, albeit a slow, steady one in my honest opinion.
Do keep in mind the Crypto-sphere is highly susceptible to FUD and bad news. Plus, the prevailing trend is bearish and therefore, the likelihood of further decline should always be kept in mind. A simple exchange being hacked could send prices dropping further. As shown in the article below:
Binance Potentially Hacked for $45 Million, Announces Unplanned Maintenance_Hack status: unconfirmed - no details from Binance team Update #1: Binance announces unplanned system maintenance…_stocksgazette.com
As with charts and technical analysis, it is always wise to look from both the bears and the bulls perspective. Only then, can we strategise on what is the best possible approach for our own portfolios.
What are your personal predictions for Bitcoin over the month of July?
Let me know your thoughts below! :)
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Iliya Zaki is the Community Manager of Chainfund.
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