When it comes to cryptocurrencies, they are not the typical assets you see being traded like fiat currencies, or commodities like Crude Oil, or Gold. They are in a league of their own, governed by no one. Cryptocurrencies like Bitcoin and Ethereum certainly haven’t followed the rule books when it comes to tradeable assets. They have been labeled as speculative bubbles because of their over-appreciative nature when it comes to value. To put it into perspective, most bubbles appreciate in 1000% in value over the space of approximately 10 years, those 10 years are important because it shows how embedded the bubble becomes in the economy.
When we throw Bitcoin into the mix, things become a little disturbed, because as you can see, it clearly doesn’t follow the 10 year appreciation period. At the time of this article, Bitcoin had risen in value by over 1200%!
Regardless of how these cryptocurrency assets act, despite what rules they do or don’t follow, we still apply a sufficient level of technical analysis and use the information to our advantage. Technical analysis is the method that employs previous trading activity and price changes of an asset, and people who trade using technical analysis believe that these factors are better indicators of an asset’s likely future movements.
Technical Analysis of Bitcoin
Bitcoin showing in a 1-hour time frame, and right from the start have some major supply and demand zones. One of the major supply zones, we are just above right now is between 11750 and 11500. You can see that the bears had failed to penetrate that area and push lower, so the bulls won.
We can also see a wedge pattern forming as well, for those of you who like to include trend lines in your analysis. If we see a break of the trend line, we could see more bull strength back up to around the 13250 area, where we could encounter some bears.
Due to its nature, it is difficult to say for certain where Bitcoin will be headed in the near future, as this asset and other cryptocurrencies can experience bouts of EXTREME volatility. A lot of things can affect the direction of an asset like Bitcoin, many of them external coming from areas of authority, like a government and banking institution, where they offer particularly negative comments which have a direct impact on the direction.
Technical analysis of Ethereum
As you can see, there are major supply and demand zones, where the heavy buying and selling took place. The buyers were that strong in the 1000 area, the sellers failed to take control, thus causing the price to rise once again. Another indication that the bull might have control of the situation here is the fact that we could be ready for a crossover on the MACD, which could send the price of Ethereum heading towards 1160. Once it hits that level, we could potentially see it fall back down the major buying zone, and if we see price reverse once again and head north, then it adds weight to the areas between 1000 and 1040 being really strong areas for buyers. If that area holds and sends price higher then I’d be looking for a retest of the 1240 zone, where we could see an influx of sellers.
Technical analysis of Litecoin
Using a Linear Regression pattern it makes things a lot easier to understand and gauge where we think the price of Litecoin could go. As you can see right now, we at the bottom of this channel where we can expect to see from buying strength. With many sellers coming in and shorting Bitcoin, we see alternative cryptocurrencies begin to rise because money always needs to go somewhere, so we could expect Litecoin to follow the same pattern here and rise back up to the 220 area.