Saturday, 29 April 2017

Next Probable Bitcoin Price Target: A Brief Technical Analysis

My investment in Bitcoin is a small sum (well, i bought it at $586 the 1st time using fiat currency, and it has more than double in less than a year. One day in the not-so-distant future, it won't be a small sum. If you put $10k into Bitcoin in July 2010, your holding is now worth about $146 million today. Not too shabby. There's simply no "investment" that outperforms Bitcoin. It's still not too late to get in by any stretch of the imagination. I reckon i could become a Bitcoin millionaire in a decade time).

My interests in it isn't pure financial gain, so i shouldn't trade in and out (my interest in Bitcoin is complex and it's composed of 40% intellectual, 30% political, 20% emotional, and 10% financial reasons). But the trader in me just couldn't help but to trade the chart's peaks and troughs. Who could resist to become a Bitcoin millionaire? I just wanna become one sooner than later. Wanna! Gotta!

Having said that, i actually haven't really looked at its chart for awhile (i've been very busy trading the stock and gold markets). Today, i've just remember to look at the BTC, and so i decided to do a quick 5-minute TA on the BTCUSD price chart. Interestingly, it happens to be not too far from a pivot level. So it demands some action on my part, soon.

 Scenario 1 

Last time, when i sold my BTC holding on early 2017. It wasn't easy to locate the price target, but i managed to sell reasonably close to bottom of the rising trend channel, which at the time wasn't established. I was simply lucky to have exited so closely to the lower trend line. Once this rising channel is established, guessing the next few price target would be easier.

Bitcoin (BTC) price chart
Scenario 1 for the next price target

The arrow point in the chart below shows a likely next price target, which is where the price touches the lower trend line. We don't know exactly where the price will test the lower trend line because that depends how fast the price drops. If the price drops to the lower trend line tomorrow (an extremely unlikely event), then the price target would be around $1000. If the price tests the lower trend line in the vicinity where my arrow points at, it would be around $1080 - $1100. The slower the price declines from here, the higher the price target it would be.

It's possible that prices can rise a little bit (say another $50) above the upper trend line from here even if scenario 1 is being played out. It's called a head fake or false breakout.

 Scenario 2 

There's a 2nd scenario though. That the BTC price continues to rise from here and the next target will be where the price tests the upper trend line. And the next price target for this bullish 2nd scenario would be in the vicinity in the $1500 or slightly higher. Remember that $1550 is only an estimate because nobody knows when the prices will touch the upper trend line. It's better to watch this then relying on the fixed value of $1500.

Bitcoin (BTC) price chart
Scenario 2 for the next price target

 In Summary 

While both scenarios are possible, they're too close to call which one will eventuate. I feel scenario 2 is slightly more likely to play out with the price target of about $1500.

The next few trading days should give you a good indication which scenario is developing.  If the prices keep on rising in the next few days, scenario 2 will likely to play out. If the price falls below $1280 in the next few days or weeks, scenario 1 is playing out.

Remember, prices can do anything it please. But the scenarios i depicted are just more likely. Doesn't mean i can't be wrong.

I'm quite happy to sell quite soon (probably next few days, or before middle of May), regardless of which scenario it would play out. And then i will buy it back when price returns to the bottom trend line, which i'm confident it will do soon (a matter of a few months), after testing the upper trend line.

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