Technical Analysis Update for Bitcoin

The Hurst cycle approach was developed by J.M. Hurst and is a powerful analytical and trading tool. The premise is that markets moves in cycles of varying nominal lengths and that all these cycles are interrelated. We are thus able to analyse price action on all frequencies, from short-term to long-term, and formulate an opinion on where price action is in relation to the overall trend/cycle structure. Furthermore, it is also a trading tool in that it identifies the appropriate trading structures in relation to the cycle phase. Cycles are measured from trough to trough rather than from peak to peak.    

Applying the Hurst cycle approach to BTC, the latest longer-term cycle (20-weeks) has a starting reference point of 6012.62, the 7-Feb low. This is where the last 20-week cycle ended and the current one began. BTC has in percentage terms encountered some big swings since the 7-Feb low (nothing unusual), however the question now is whether a clear bull trend is indeed under way. 

From a cycle perspective BTC is now seen to be trading in the first phase of the second 80-day cycle within the current 20W phase. The last 80-day cycle appears to have ended on the 2-Apr low of 6427.10. What was interesting about price since this low, was the reversal pattern that occurred. Highlighted in the chart is a double bottom, applying traditional price pattern analysis. This pattern was confirmed on 13-Apr, a day which saw a strong price appreciation in BTC. Price action has since moved higher and importantly, this activity is now seen to be in rising 20-day cycle, a rising 40-day cycle and a rising 80-day cycle. The combination of this, together with an observation of recent activity over the past few weeks, is that upward price pressure is likely to dominate near-term. Whether this means, BTC will rally all the way to the 11500-12000 area, is debatable at this stage. Keep an eye on support on 7830, the 18-Apr low as an initial risk parameter. Bulls I suspect are feeling encouraged to take price higher.   

To summarise, BTC currently appears to be in a multi-period bullish cycle phase and this suggest prices should continue to move higher. The first point of reference from a risk perspective is 7830. 

 

About the author: Taso Anastasiou is an experienced technical analyst who after all these years still finds the challenges of predicting market movements stimulating. Taso has been involved in the field of communicating financial market ideas for over 20 years having done this through a dedicated research house and the investment banking sector.