Predicting the Future of Bitcoin with Technical Analysis
The Bitcoin price rise (against the Yen) has been successfully lifted from a “triangular holding” continued for about three months (red circle part of the attached chart), up to around 264 Yen, which is the highest price for two months as of 2/24. After that, it was strongly pushed down to around 400,000 Yen temporarily from the reaction that it went up quickly, but you can also confirm a certain basis such as the price recovering to around 420,000 Yen soon.
This year there is a lot of potential material that has the potential to boost Bitcoin, such as a Bitcoin ETF listing on the CBOE in the US and Bakkt’s launch by the Intercontinental Exchange. Also, the fact that the noise and war over Bitcoin Cash of last November (Hash War) is getting settled back will also be a factor to support Bitcoin. If it is possible to break through 500,000 Yen, which is a psychological milestone, the sudden repulsion to around 742,000 Yen, which is the level just before the hash war, may also be in sight.
In this article, I would like to dive into the future of the Bitcoin market from a technical analysis point of view.
① moving average line (daily)
First, technical analysis will be conducted using the moving average lines (9th and 21st).
The attached chart combines the daily candlestick since November of last year and the moving averages of short-term (9 days) and mid-term (21 days). The 9 day Moving Average (red line) surpassed the 21 day Moving Average (blue line) on February 10th, and a golden cross was realized (red circle part). In the market, “the beginning of the uptrend” is strongly recognized and it can be said that short covers are easily triggered. The 21 day Moving Average (blue line) is likely to function as a support, and unless it falls below the same level, you may determine that the Bitcoin market has “strong rising momentum.”
② Ichimoku Clouds (daily)
Next, let’s confirm the Bitcoin market value using the Ichimoku Clouds table.
As shown in the attached chart, the Bitcoin market rapidly expanded from near the cloud lower limit of the Ichimoku Cloud table on 2/18, and broke through the upper limit cloud on a stretch. At this point, a three part turnaround (a turning line above the baseline, two lag lines above the prevailing market, and three actual markets above the cloud) representing a ‘strong buy’ signal has been realized. This strength has been verified. Even after plunging on 2/24, the upper limit cloud on the Ichimoku Equilibrium Table functions as a support, and the shift to the “Straight → rising trend” is strongly noticed.
③ Bollinger Bands (daily)
When analyzing the Bollinger bands, it is necessary to focus on 3 points: 1: mid band orientation, 2: %b position, and 3: bandwidth. If you use Bollinger Bands as an anti-slip tool (oscillator index), you need to be careful, as there is a risk that you will miss a great opportunity to get into a trend, especially in the early stages of a strong trend. Make sure you have the habit of comprehensively analyzing the above three points.
First, let’s check the mid band.
The top row of the attached chart is the mid band (red line). The mid band keeps firmly on the right and the prevailing market price is located above the mid band. As a result, you can determine that the rising momentum of the Bitcoin market is strong.
Next, check the relative price level (whether overbought or oversold) with %b in the middle of the attached chart. A line of 0.75 is “+1 sigma,” a line of 1.0 is “+2 sigma,” and if it exceeds +2 sigma, it is generally determined as overbought (there is a feeling of overheating). As %b remains at around +0.6, the current Bitcoin market value “does not show any signs of overheating.” It can be determined that the current level is not suitable for reversing.
④ RSI (daily)
Finally, let’s confirm “RSI,” which is a representative of an oscillator type indicator.
Bitcoin’s RSI turned on the overbought signal (over 70%, the portion enclosed in blue) for 6 days from 2/18 to 2/23. As a result, the Bitcoin price plunged on 2/24, which means that the RSI warning was correct. However, the current RSI has dropped to around 55.14%, and “the feeling of overheating is not particularly noticeable.” It can be determined that this is at a neutral level.
As mentioned above, the Bitcoin market price can confirm the strength of rising momentum, such as the golden cross of moving averages, the improvement of three roles in the Ichimoku Cloud table, and the Bollinger mid band rising to the right, in the trend type technical index. In addition, with the oscillator type indicator, neither Bollinger band %b nor RSI gives the impression of overheating.
In other words, despite the fact that rising trends are occurring, there is no over-bought feeling, so based on technical analysis, it can be determined that following the Bitcoin Long trend is appropriate.
※ Please invest at your own risk!