Analysis provided by Ashton Fraser, learn more about his trading strategies at the Lasers forex forum.
Bitcoin appears to be trading within the confines of a very specific channel, determined by two key retracements levels, clearly observable on the Weekly timeframe, when applying a Fibonacci study.
During midweek's analysis, I posted the following BTC/USD Daily chart:
Where I mentioned, "As of this morning, Bitcoin has hit a week high at 607. Will the bulls manage to rise even further? It looks unlikely this week... 607 is located at the 50% level if we perform a shorter term Fib study from this month's high until this month's low (marked in red). This resistance may prove too strong for a further hike this week."
And so it proved. In fact since Wednesday, we've seen a drop to the 23.6% at 575 (marked in blue), as can be seen below, although the bears weren't able to break below this level (click to expand):
However, lets go back to what I touched upon at the very top, i.e. the two Fib retracement levels on the Weekly chart. A picture speaks a thousand words; everyone can see what's happening:
I've performed the Fibonacci study to the high and low of this year, which as we know are two strong psychological round numbers, i.e. from the swing high of 1000 during the first week of 2014, until the low at 300, during early February. So in recent weeks, (from the last week of May) we have the 38.2% Fib at 565 acting as support (marked in blue), with the 50% Fib at 645 acting as resistance (marked in red).
It's hard to see this channel letting go of price this coming week, thus we're likely to see further meandering between these two levels.
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