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BITCOINS: Prepared for pullback or healthy correction

Bitcoins continue to trade on the front foot and looking northwards. Having witnessed a solid recovery from the lows of $2975 towards $3750 (the 38.2% retracement of the previous advance), Bitcoin price has extended their gains towards new highs. Refer to the post made on 19th Sept 2017: http://www.chartadvise.com/bitcoin-bulls-back-action/

Technical key parameters as indicated quite similar action was seen in the recent history i.e. Mid-July and the current where price dip to the 100-day moving average was short lived as the RSI (relative strength index) was oversold. Additional evident were mentioned in details in the post above.

Recent up move as compared to previous marked on the below chart is seen quite limited. The current up move have completed its 100% extension of the ABC pattern. However, short-term overbought technical conditions has led price to cap gains at the levels as RSI approached to previous peak levels. Meanwhile, we have also noticed that volumes across major exchanges shot up more than 14% in the previous week.

BITCOIN

The minimal 23.6% retracement of the current advance sustains at $5420 levels while 38.2% retracement at $4850-$4960 levels. Secondly, the long term chart also indicates formation of uprising parallel channel. Bearish divergence in RSI at the oversold area indicates the correction to be in happening. The levels are quite important as of now as breaking below the levels will trigger healthy corrective move (but not bearish view) towards the lower channel supports around $4400 levels.

On the Other hand, If Bitcoin price finds support around the 38.2% retracement levels (which is also the previous peak), the recovery would follow with an upside breakout of the channel and will also open doors for a sustained rally towards $7060-7070 levels. Further, the potential benefits of holding bitcoin ahead of the hard fork in November could also bring in more buyers, leading to higher prices.

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