BTC/USD Technical Analysis – 5th May 2014

Bitcoin begins the week in a gentle mood, contemplating for a few hours at a time, whilst it calculates what

Bitcoin begins the week in a gentle mood, contemplating for a few hours at a time, whilst it calculates what its next move shall be.

Let’s take a closer look at the latest BTC/USD Daily chart below:

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btcusddaily_05_05_2014

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I’ve performed the Fibonacci study from the low of April on the 11th at 342, until the latest swing high on the 16th at 544.

It appears as though the 61.8% Fibonacci retracement level is providing some support for the meantime, as it has been tested twice over the past three days (circled in blue). If you look at the past eight or so candles, almost all of them have short bodies, possessing relatively long wicks – so our price action alludes to persistent ranging. It’s not just price action, we have indicators telling us the same thing. Indeed, during my technical analysis over the weekend, I explained how, “The problem now is, there are conflicting technicals at work, e.g. we have the Stochastics looking rather messy…this often indicates choppy price action, especially when corroborated with further inconsistencies between other major technical indicators, such as the Parabolic SAR dots above the candles, whilst the Awesome Oscillator appears bullish, hence I’m not optimistic about a clear direction being established in the immediate future.” Arguably, this could continue for some time yet, because I’m not seeing much that can give either the bulls or bears any impetus.

One possible scenario is the Bollinger Bands get squeezed, until a breakout occurs – this is already happening, since all three Bollinger lines are becoming horizontal. If a bearish break out occurs, we may see a drop to 78.6% Fibonacci level, but don’t expect that to occur during the early part of this week, there are just too many conflicting signals from the four hour timeframe, the current Daily timeframe, and even on the Weekly timeframe.

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