BTC/USD Technical Analysis – 21st Feb 2014

Analysis provided by Ashton Fraser, learn more about his trading strategies at Forex Reversal. After yesterday’s drop, Bitcoin managed to

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

After yesterday’s drop, Bitcoin managed to regain some of its losses. Let’s take a look at the BTC/USD Hourly chart below.

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btcusdh1_21_02_2014

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I’ve circled a significant candle in blue. This candle is very important from a technical point of view. Look at how it opened, yet virtually closed below the lower Bollinger band. On it’s own this is strong reversal pattern. But combined with other technicals, the probability of reversal is strengthened even further. This pattern always precedes any other technical indicators, so it’s important to watch what happens over the next few candles to attain confirmation of any impending reversal.

Indeed, over the next couple of candles, we can see how the Accelerator Oscillator turned green, followed by the underbought Stochastics crossing over and heading upwards. Naturally, the Awesome Oscillator soon followed suit.

For me, this is a classic reversal pattern, and profit targets can be set at the subsequent Fibonacci levels. You can see how price reacted to practically every retracement level. First the 23.6% level, then the 38.2% level, then at 50%, unsurprisingly, seeing as though this was a strong reversal pattern, price went all the way up to the 61.8% Fib retracement level (around 577), marked in red.

Since then, price has dropped back down to the 38.2% Fib level. Interestingly, the Accelerator Oscillator has now turned red. I’d expect a further drop to around 540 before the day’s end.

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