Bitcoin (BTC): genesis of the rebound, volume and price targets

Credit: Eivind Pedersen – Pixabay

The bitcoin price confirmed his bullish reversal exceeding the 8500 $. Let's go back to the genesis of the formation of the low point on $ 6500 and consider here the technical objectives for the next few weeks using trading volume.

Key technical factors of the article:

• • The bullish reversal from support at $ 6,500 is a classic technical pattern of trend reversal in stages.
  • With price and its momentum, volume is the second crucial information in market analysis. Let's take stock of the volume on classic Bitcoin (over the counter) and the future Bitcoin contract.

Bitcoin price – tradingview

The double rebound on $ 6,500 last December allowed the upward trend reversal of the course Bitcoin, a bullish reversal which satisfied all the classic technical stages (my technical notes for the month of December described them progressively). This stabilization initially developed on the chartist uptrend line of 2019, the one that joins all of the most extreme market lows since January 2019.

The recovery was preceded by a upward price / momentum divergence (the momentum is represented here by the RSI technical indicator) then the BTC proposed a technical configuration in double bottom (or inverted shoulder-head-shoulder for some chartists) before finally crossing the $ 8,500 threshold defined in a previous post as a pivot for the medium term. Technically, the targets of the recovery are at $ 9,450, $ 10,000 and $ 10,600 and the invalidation is below the low point of the January 14 session.

In this new analysis, I will address the subject of transaction volume on the bitcoin price classic (over the counter / otc) and the Chicago Mercantile Exchange (CME) future contract. By the way, the CME now offers option contracts on Bitcoin, this will strengthen the general trading volume among professional traders who go almost exclusively through futures and options contracts.

First of all, I note that since the beginning of the year, the level of the volume traded each day is tending towards the amounts of last April, that is to say at the time an initial phase of upward trend, but the figures are still lower. The daily trading volume is less attractive than the volume traded in buying and selling by price range because the latter defines supports and resistances, ie entry points and targets.

The graph below shows the buy and sell amounts per interval of $ 500 on the y-axis for "classic" Bitcoin. We can see that the $ 6,500 / $ 8,000 zone is an accumulation zone with a high volume of transactions, especially with the purchase. If we look at it, it is visually clear that the $ 9,500 / $ 10,500 zone has been a distribution zone with many selling interests, making it both a rebound price objective and a resistance which will be the source of a pause in the recovery.

BITCOIN: buy and sell volume (blue) and sell volume (red) by price range $ 500

In my previous post, I returned to the positions opened by institutional traders on the Bitcoin future contract. As of January 7, long positions had increased significantly but remained below short positions. These data are published several days late so it is still not possible to know if the strong hands participate in the rebound as in April. This information (the report TOC) will be made public on Friday January 17 and I will describe it in an article next Monday. Finally, note that the report TOC will include the positions on the options launched by the CME, it will be even more interesting to follow. In the meantime, the past trade volume suggests a recovery target of between $ 9,500 and $ 10,600.

Follow Vincent Ganne on Trading View for further analysis on the financial markets.

The technical thresholds and the trend indicated above are based on the technical approach "price, momentum, sentiment, ichimoku". The data come from Bitstamp and the graphics of TradingView. You can consult the history of our technical points on cryptocurrencies in click here.

This content is offered for informational purposes only and does not constitute an investment recommendation. We remind you that theinvestment in crypto assets, including Bitcoin, is extremely risky. Cryptocurrency prices are susceptible to large price swings.