BTC/USD Technical Analysis – 4th March 2014

Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.

After the Bollinger squeeze over the past week or so, Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term rises again.

Let’s take a closer look at the BTC/USD H1 chart below (click to expand):

I’ve done the Fibonacci study from the major swing low at 430 until this yesterday’s high at 690.

First thing we notice is the long term channel that Bitcoin had been trading inside, as indicated by the white box I’ve drawn on the chart, between 530 and 590. Obviously, given Bitcoin’s volatile nature, it was understandable that price couldn’t be contained in such a relatively small area for long.

And so, yesterday at 3pm GMT, price finally broke the resistance that I talked about yesterday morning in my analysis. Also, preceding the break, look at how the Awesome Oscillator was uninterrupted, suggesting a break could indeed occur.

But let us zoom in a little and look at what happened after the strong break. See chart below:

As can be seen, there was a retrace down to the 23.6% Fib level. This was initiated by a very powerful price pattern. Look at the candle I’ve circled in red. A bearish candle, that both opened and closed above the upper Bollinger band. In addition, the Stochastics were overbought at the time, so price dropping to 630 could be expected.

However, as I type this, price has pushed up again to yesterday’s high at 690, where it has already been tested earlier this morning actually. The resistance is struggling to hold, and if we get a candle clearly closing above 690, we can expect another rally, seeing as though we still have AO and AC as bullish.