Jul 29, · Bitcoin's long-term trendline suggests it has plenty of room to run, Ari Wald, head of technical analysis at Oppenheimer, said Monday. The world's most Author: Ben Winck. Sep 18, · Blockonomics, one of the leading Bitcoin payment gateways, has just released an analysis using their e-commerce data to provide a snapshot of how the Bitcoin and e-commerce markets intersect and Author: Jared Polites. Bitcoin Price and Technical Market Analysis May 20th, By Peter. Posted on 21/05/ 4 min read. Bitcoin price range narrowed to %. Fixing above $ buyers will continue active growth to $10, To change the local trend, it is enough for sellers to fix below $
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The estimated price target for the next breakout after the consolidation is symmetrical to the height of the cup. In this chart, the same cup with handle pattern signifies the end of a downtrend and a breakout into an uptrend. Once the cup formation transitions to a handle formation, the price must not decline beyond half the height of the cup. The longer it takes for the cup with handle pattern to form, and the deeper the cup formation, the greater the momentum behind the breakout and the higher the price target.
When you add the height of the cup to the breakout point, it provides a good indication of the short-term price target. Flags and pennant patterns are continuation patterns. In this chart, we see the consolidation phase in the middle.
The long-term trend takes a brief brake, creating a rectangle shape on the chart. Then, the long-term uptrend continues, the rectangle breaks, and prices continue moving upwards. You can also have both bearish and bullish flags. With these flags, the pennant is formed by a slight sloping move in the direction opposite to the prevailing trend.
A flag is a rectangular shape, while a pennant is a triangular shape:. Flag and pennant patterns are typically preceded by a sharp rally or decline. You can analyze a price target from a flag or pennant chart. Typically, you do this by adding the length of the flag pole to the top of the formation in an uptrend and by subtracting the length of the flag pole from the bottom of the formation in a downtrend.
Once prices fall below the neckline, the upward trend breaks down, and markets enter a bearish trend, as seen in the chart below with the pullback and target line. Head and shoulders bottom charts , meanwhile, are also known as HS bottoms or inverse HS charts. Just like the HS top chart, the HS bottom chart consists of three parts, including two shallower valleys or higher lows on either side of a deeper valley or lower low. You can calculate price targets from head and shoulders charts.
For HS top charts, you can estimate the price based on the ratio of the higher high to the breakout point along the neckline. For HS bottom charts, meanwhile, you can calculate a price target by adding the height of the head to the breakout point using a similar method.
If the lower low is 20 and the breakout occurs at 30 a ratio , for example, then the target price is Double top charts are bearish reversal patterns in a prevailing uptrend. To calculate the price target of a double top pattern, you can either subtract the height of the formation from the point where support breaks.
A double bottom chart formation is what happens if you flip a double top formation upside down. The double bottom formation is a bullish reversal pattern in a prevailing downtrend.
Prices may rally to a recent high following a downtrend, then fall again to the level of the previous low, before rallying a final time to break out above the previous recent high to complete the formation and reverse into an uptrend.
To calculate price targets for double top highs, you can add the height of the formation to the breakout point. If the bottom of the formation is 5, for example, and the first rally reaches 10, then the price target would be Making the above formations even more complicated is that we can sometimes have triple top and triple bottom formations that look similar to double top and double bottom formations.
They go against a prevailing uptrend or downtrend. As you can see here, the triple top formation consists of three equal peaks split by two valleys. The triple bottom formation, meanwhile, is flipped upside down, consisting of three identical valleys and two abortive peaks. The rounding bottom or saucer bottom formation is a bullish reversal or continuation pattern.
You can connect low prices within the bottom to form a rounded shape representing the bottom of the saucer:. The formation first begins to form with selling pressure, causing prices to drop. This pressure eventually loses steam and transitions to an uptrend.
Buying pressure subsides, causing prices to drop to a new low, and this trend repeats several more times until the lowest low is hit. Then, buying pressure takes over, eventually leading to a breakout and completing the rounding bottom formation.
To calculate short-term price targets for rounding bottom formations, you add the height of the cup to the resistance line. There are two types of wedge patterns, including rising wedge patterns and falling wedge patterns.
These patterns can be continuation or reversal patterns depending on what markets were doing before the pattern formed. In an uptrend, a rising wedge pattern indicates a bearish reversal. Markets are turning and prices are starting to drop. In a downtrend, a rising wedge pattern is seen as a continuation as prices continue to drop.
The falling wedge, meanwhile, is considered a bullish pattern. The falling wedge indicates a bullish reversal when formed in a prevailing downtrend, for example. When formed in a prevailing uptrend, the falling wedge indicates a continuation as prices continue to rise.
Rectangle patterns form when prices are bouncing between roughly equal highs and lows for a certain period of time. When drawing lines around the highs and lows of this period, you can see rectangles start to form.
The rectangle, also known as the trading range or consolidation zone, is a continuation pattern where the price ranges between parallel support and resistance lines. During this impasse, the price will test support and resistance levels several times before breaking out. When the price breaks out, it will either reverse the previous trend or continue it moving either upward or downward. To calculate price targets during a rectangle formation, you add the height to the point of the breakout or breakdown.
Bilateral patterns consist of three different triangle formations, including symmetrical triangles , ascending triangles , and descending triangles. Ascending triangles are typically bullish continuation patterns in a prevailing uptrend. However, ascending triangles can also form as a reversal pattern in a downtrend. An ascending triangle pattern consists of two or more roughly equal heights and increasing lows.
The resistance line is horizontal, although the extended support line slopes upward and convers with the resistance line, which is how the triangle is formed. For an ascending triangle to form, each swing or low must be higher than the previous low. The formation is typically considered to be complete when the price breaks out past the upper resistance line. The stop loss should be placed at the most recent swing low. The descending triangle is the opposite of the ascending triangle.
However, it can also form a reversal pattern during an uptrend. The descending triangle is formed as equal lows create a horizontal support line while decreasing highs create a downward sloping resistance line, creating the same type of right-angle triangle seen in the ascending triangle above.
To calculate the price target in a descending triangle formation, you subtract the height of the base of the triangle to the point where support breaks down. A symmetrical triangle , as you might have guessed, forms somewhere in between an ascending and descending triangle pattern. This point forms the tip of the triangle. The support and resistance lines, meanwhile, form the two sides of the triangle, eventually meeting at the point.
Since the breakout direction is difficult to determine, some traders will play both sides in a symmetrical triangle pattern, placing a long and short order, then closing one when the other hits.
To calculate the price target in a symmetrical triangle, add or subtract the base of the triangle to the breakout point. Certain patterns present a more powerful profit-earning opportunity than others. Historically, the following five patterns have given traders the best opportunities:. Picture the broader chart patterns we discussed above as like the climate as it changes from spring to summer to fall and winter. We see the broader changes in the temperature, daylight, and weather throughout the year.
Technical signals, meanwhile, are the short-term information you read to predict which season is coming next. You might notice the temperature drop from 40 to 30 in a week, for example. This signals that winter is coming. You need context to understand what that technical indicator means.
You can derive context by looking at information like a prevailing trend, chart pattern, and more. Overlays: Overlays are indicators that use the same scale as the price and are plotted on top of the price chart. Oscillators: Oscillators are displayed independently on a different scale below the price chart and will oscillate between a minimum and maximum value. Certain technical indicators are considered leading indicators. A leading indicator has strong predictive qualities and can indicate the direction of the market before the price follows through.
Other technical indicators, meanwhile, are considered lagging indicators. Lagging indicators follow market trends. They indicate a shift in market trends, but they tend to lag behind that shift. Typically, a lagging indicator is used to confirm a trend after a trend has already begun to emerge. However, lagging indicators have less valuable in a volatile market with no clear trend. The two best-known lagging indicators are Bollinger bands and moving averages.
Moving averages are trend overlays that can indicate short, medium, and long-term trends. To calculate the moving average, we take the average price over a certain period of time. It can make trends easier to spot. There are two common ways to calculate moving averages, including simple moving averages and exponential moving averages. Both are considered lagging technical indicators. A simple moving average SMA is just the sum of all closing prices over a particular time period divided by the number of periods.
A 5-day SMA, for example, can be calculated by adding the closing prices for each day and dividing the sum by five. Longer scales smooth our price movements and tend to be less responsive than shorter time scales. Check out the chart below to see how this works in practice. The day moving average lags behind the price movements, while the day moving average tightly hugs the price movements:. Exponential moving average EMA , meanwhile, places greater weight on the most recent data points.
Exponential moving averages use a weighting multiplier to give the most recent data points greater weight. Charting tools apply these formulas automatically. However, it helps to know where these formulas are coming from.
Simple moving averages and exponential moving averages are two ways to outline the same trend. One is not necessarily better than the other. They each have their own advantages. An exponential moving average , for example, responds faster to recent price movements and hugs the price curve more closely. A simple moving average , meanwhile, is ideal for identifying long-term support and resistance levels.
The slope of the simple moving average is also used to gauge momentum towards a specific trend. Typically, the day simple moving average SMA chart and the day SMA chart are the two most popular scales for identifying medium to long-term trends. These two charts are also useful for identifying support and resistance levels, bullish and bearish crossovers, and divergences. When the simple and exponential moving averages come together, it creates a crossover.
This is considered a pivotal event that could signal a trend change. There are bullish crossovers, for example, which are also known as golden crosses. A bullish crossover occurs when the shorter scale moving average crosses above the longer scale moving average. There are also bearish crossovers, also known as death crosses. A bearish crossover occurs when the shorter scale moving average crosses below the longer scale moving average. If the current price crosses below the long-term moving average, it indicates a bearish breakout.
Moving average convergence-divergence, or MACD, is a trend-following oscillator popular for gauging momentum. MACD takes two exponential moving averages like the day and day EMA , then plots them against the zero lines to measure the momentum of a trend. It indicates that the market is bullish. The higher the value, the stronger the upward momentum.
A negative MACD , meanwhile, indicates that the market is bearish, with lower values indicating strong downward momentum.
Pivotal events include convergence, crossover, and divergence from the zero line and the signal line. Relative strength index, or RSI, is a way to indicate momentum. Momentum can identify the strength of market trends, giving you a good idea of when to buy or sell based on whether markets are overbought or oversold. RSI oscillates between 0 and , with the typical timeframe being 14 days.
When RSI is below 30, it indicates the market is oversold. When the RSI is above 70, it indicates the market is overbought. However, some traders use 20 and 80 as the boundaries instead, which can be more telling for highly volatile markets including crypto. Because RSI is a leading indicator, the slope of the RSI can indicate a trend change before that trend is observed in the general market. For that reason, RSI is one of the most common ways of analyzing market conditions.
These values are absolute, which means that losses are calculated as positive values. You can see a bullish divergence when the price hits a lower low and RSI hits a higher low. A bearish divergence, meanwhile, occurs when the price hits a higher high and RSI hits a lower high.
We can also use RSI to observe RSI failure swings, which are seen as indications of potential trend reversals in a bearish or bullish direction. A bullish failure swing occurs when RSI falls below 30, bounces past 30, falls back, but does not fall below 30 and makes a new high.
A bearish failure swing, meanwhile, occurs when the RSI breaks above 70, falls back, bounces without breaking 70, and falls back to a new low. SAR will stick close to price movements over time, falling below the price curve during uptrends and above the price curve during downtrends.
Because of this nature, traders use the parabolic SAR indicator to set trailing stops and protect against losses. There are separate formulas for calculating rising and falling SAR. The formula takes data from one period behind.
In these formulas, EP is the extreme point either the highest high or the lowest low of the current trend and AF is the acceleration factor.
The acceleration factor is initially set to a value of 0. When you set AF too high, it can create too many whipsaws, creating false reversal signals. Average directional index ADX has risen in popularity in recent years to become a preferred indicator for estimating the strength of a trend. As a lagging oscillator, ADX offers little insight into the future trend direction, although it does indicate the magnitude of market forces behind a trend.
ADX oscillates between 0 and , with ADX typically below 20 in a ranging market and above 25 in a trending market. An ADX above 40 indicates a strong trend. We calculate DMI by collating the highs and lows of consecutive periods. These formulas may seem complex. There are plenty of tools that implement these formulas for you. If you want to be an informed technical trader, however, then it helps to understand where these formulas come from.
ATR offers no indication of trend direction. This is a strong bullish signal. Fibonacci retracement , as you may expect, is connected to the famous Fibonacci sequence or Fibonacci number.
The sequence starts with the numbers 0 and 1, with each successive number in the sequence behind the sum of the two preceding numbers. It seeks to quantify how much of a pullback we can expect after a surge or drop in prices.
In the Fibonacci sequence, the ratio of any number to its successor is 0. This is the golden ratio , a number that plays a significant role in biology and mathematics. Fibonacci retracement uses this same ratio to identify support and resistance levels. Retracement levels are drawn on a price chart after marking the high and low point of a trend.
Why are these numbers important? Well, a A bounce from this level is less common if the correction has momentum. The Some analysts also use a derivative of Fibonacci retracement called the Fibonacci extension to identify how far a rally might go. Under the Fibonacci extension, zones can be found at Elliott studied American markets for a decade during his retirement, then theorized that prices inevitably — and constantly — move in a fractal wave pattern.
This fractal wave pattern is linked to natural laws, and you can outline the fractal wave using the Fibonacci sequence. Elliott theorized that market prices moved in two types of waves, including impulse waves and corrective waves. Impulse Waves: Impulse waves, also known as motive waves, move in the direction of the prevailing trend and consist of five smaller waves, including three trend-advancing or actionary sub-waves split by two corrective sub-waves. Corrective Waves: Corrective waves that can be part of a larger impulse wave move against the direction of the prevailing trend and consist of three smaller waves, including two corrective sub-waves split by one actionary sub-wave.
This structure makes up each Elliott wave cycle. We saw this pattern in real bitcoin markets during This chart also shows prices holding at the Fibonacci retracement levels and Elliott wave patterns are just two types of technical indicators that form a partial picture of crypto markets. If all of the signals are pointing towards a similar result, then you have a more informed view of the market. Bollinger bands trace their origin to American financial analyst John Bollinger, who developed the theory in the s.
Bollinger band analysis uses a moving average-based overlay to measure price volatility. The theory involves three bands, including a middle band to represent the simple moving average and an upper and lower band to represent standard deviations.
For the middle band, analysts typically use the day simple moving average SMA. The upper band, meanwhile, is the same SMA with two standards of deviation added, while the lower band subtracts two standards of deviation. Analysts can adjust the number of periods based on their trading preferences.
However, analysts will use the same number of periods to calculate SMA that they use to calculate standard deviation. When the price suddenly moves outside of the upper or lower band, it indicates a breakout could be upcoming. During a strong uptrend in markets, prices tend to hug or move out of the upper band, for example, while during a strong downtrend, price activity is focused around the lower band. During market swings, the middle bands acts as a resistance for downtrend movements and a support level for uptrend movements.
There are multiple variations of these patterns. M Tops: M top or double top patterns occur in an uptrend and are indicative of a bearish reversal. In this formation, the price hits a point high above the upper band, then retreats below the middle band.
The band moves up again but stops short of the upper band. When the second surge fails to reach the upper band, it signals a weakening trend and likely reversal. W Bottoms: The W bottom or double bottom formation is what happens when the M top formation gets flipped upside down. It signals a bullish reversal.
Maybe neither? Does Bitcoin have a future? As Blockchain makes new advances, could this lead to mass adoption of the tech? Can Bitcoin remain the king of cryptocurrencies?
According to the reporting of The Guardian , Bitcoin:. In November, the power consumed by the entire bitcoin network was estimated to be higher than that of the Republic of Ireland. This is true. Even China has gone so far as to threaten banning bitcoin to offset negative environment effects April Mining is necessary to secure pieces of bitcoin.
It keeps your coin valuable, helps prevent your digital wallet from being hacked, and makes it a safer all around digital asset. The truth is, bitcoin mining also serves a purpose for the user and for the asset itself. It is vital to the purpose and value of Bitcoin. Fiat moneys USD, the pound, Euro, Yen etc also have a system of operations and security that uses considerable energies to maintain- the banking system.
The comparison they made overlooks the realities of modern tradition banking and just how much electricity it uses. Kelly-Pitou, technology researcher at the University of Pittsburgh, had this to say :. This is a little bit more than three times the energy Bitcoin mining consumes. Banks have online and physical branches, offices, and ATMs- all of which consume energy. The big difference between the two is banks are centralized to a limited amount of locations and bitcoin mining is decentralized, relying on small computer arrays.
For example, Iceland relies on nearly percent renewable energies and is a hub for bitcoin mining- making it not a threat to environmental concerns. China, on the other hand, still relies heavily on fossil fuels despite trying to lead green energy innovation because of high amounts of population in their country for electricity. Bitcoin being mined heavily in China would be a massive environmental concern. For 10 years, bitcoin has been portrayed by big media names as a bubble about to pop for good and have pronounced bitcoin dead more than 30 times.
Or is there more stable mechanisms behind the price? To start with, all new markets start volatile. Every new technology and asset class has experienced a similar rise and fall cycle. Yet we are still using the internet more than ever. Such a useful new technology is hard to overlook just because it suffers a bust. The argument is: that is what digital assets and the Blockchain tech they are responsible for will be.
Stocks also experienced similar boom and bust cycles in their early days. The first were invented in the s and they were rough. There was no regulation, volatile price changes, scams, and they were sold at coffee shops instead of stock exchanges. Bitcoin has seen volatility, massive price changes, scams, and before exchanges started popping up, there was a peer-to-peer marketplace on localbitcoins.
Stocks have existed more than years, dotcom companies for more than 40, and Bitcoin for only 10 with a majority of the cryptocurrency market being even younger. While this was mostly sensationalism meant to scare people and ultimately hurt the futures of Bitcoin, it is partially true.
However, it is important to do your own research and understand things for yourself instead of solely listening to sensationalist journalism. Major exchanges like Coinbase, Binance, Kraken, and others do this. The reason singular large whales cannot manipulate prices as significantly as you would assume is because the cold wallets held by exchanges diminish their impact. Processing Bitcoin takes an average of 10 minutes while big name card payments like Visa and MasterCard work in seconds.
Remember internet in the late 80s? It had an Ethernet hook up, took up phone lines, and took close to 10 minutes to load.
Bitcoin has only been around as a company for 10 years, give it some time. It may not be able to handle quick transactions now but the technology is still learning and it can easily get there. According to Forbes, there are scams where hackers email their victims requesting BTC payments by blackmailing them with sensitive information. If you want to get something done, nothing moves mountains like laying down cash. Sciencemag wrote a full report on how governments are developing techniques for tracking criminal activity in the Blockchain and learning how to trace bitcoin payments back to the criminal that made them.
BTC was a popular form of payment for a few years because it was anonymous, there were no regulations or protections, and no one knew how to tackle such a new technology yet. All of those things are no longer true or changing. While it is possible to pay for things with Bitcoin, with some regions and countries being more readily available for the option, it is still quite difficult.
On the one hand, a journalist from Business Insider spent a day trying to do just that and failed abysmally. New payment adoptions take time. As Bitcoin becomes more popular, it will become easier to use. There are significant limitations to Bitcoin and hurdles that would have to be overcome before it could be a daily use payment.
Some may not ever happen. That same journalist from Business Insider tried to accomplish the same goal using a gold bar. We all know there is great value in gold but trying to pay for anything with it was found to be impossible at least they were able to find 2 places that took BTC as payment.
Brand new technologies are often not user friendly because they are so new. Remember all the steps it took to make an email decades ago? It required plugging in and unplugging things several times, sending away for a CD to download AOL, and a long amount of time. Especially as something we are not used to doing. For example, gold is not easy to own. The difficulty of Bitcoin may help it retain its value if it never gets easier to use and especially if it becomes a store value like gold.
Criticism of Bitcoin is not always justified and it takes your own keen research to see that. There is a lot of assumptions made when guessing where Bitcoin will go and the truth is, no one actually knows. Not everything makes it through its trial phase of popularity. But Blockchain is one of the most promising technologies of the 21 st century and the century only just began.
The tech is still in its infancy and although we are finding new adaptions for it in our current way of doing things, it could usher in an entirely new way including with cryptocurrencies. Like with all things, we must give it time. Be sure to bookmark and visit us daily. Coinbase Launches Legal U. Increased Trading Volume Breaks Mt. Bitcoin 0. The best way to tackle futures of Bitcoin is to take apart the arguments, one by one.
It starts as a volatile novelty and it slowly becomes more and more a part of our daily lives. For now, Bitcoin cannot be a reliable, widely used for of payment. For now. Think about how far the internet has come since then, even after the dotcom crash. The coin is slowly reversing a years-long downtrend and is displaying "the type of action" a crypto bull would like to see, the analyst added.
Watch bitcoin trade live here. Indices in This Article. Dow Jones 30, Currency Exchange Rates. Currency Converter.