Bitcoin Price Analysis: Yuan Devaluation on the cards, Bitcoin to go up further?

Bitcoin Price Analysis: Yuan Devaluation on the cards, Bitcoin to go up further?

  • October 11, 2016
  • /
  • Deepak Bharadwaz

First week of October has seen a positive start for the cryptocurrency, with constant trading over $600 level. The bullish push came at the start of the second week, where market broke $620 and continued to trade higher. Market finally managed to surmount the long term resistance of 100 SMA at 618-620 level cruising to higher prices. While the setup looks bullish, let’s look into the price analysis for the coming week:

Fundamental Key Points:

The adoption of the cryptocurrency and its underlying technology has always been fundamentally positive for the Bitcoin ecosystem. Here are few highlights of the past week fundamentals that might continue to have effect on the prices:

  • China’s Renminibi added to IMF’s SDR as fifth reserve currency
  • FBI investigating into $1.3 Million Bitcoin theft of Bitfinex
  • Russian central bank trys first Distributed Ledger Transactions
  • UN testing Bitcoin and Blockchain for Remittances
  • Dubai to move all Government Documents on Blockchain by 2020

Adding to the above, from a macro perspective, addition of Renminibi to SDR might now see further devaluation of Yuan. As the Chinese have been holding off further devaluation till the review period of IMF, there is a good chance of further downward move. In any case, it would also depend on the timing of the news release and the trading prices at that point.

Technical Analysis:

Long Term Trades:

long-term-analysis

The Long Term chart has been in an uptrend from the start of this year, with no sign of any set up change currently. The market managed to breach the 100 SMA at $618 and close above it for three consecutive days. Now this 100 SMA can act as long term support and long term positions can be taken with adequate risks. The previous swing high at $770.89 can be a target.

On the daily chart, the Bollinger bands are still not trendy. The change from sideways to trending might be a slow one driven by good fundamental factor. Hence it is important to keep an eye on reserve currencies during this period. Long term trades from the bearish side look risky unless there is fundamental bearish news driving the markets.

Short Term Trades:

short-term-analysis-daily

On a daily chart, the Bollinger bands are beginning to open out and indicating slow change into purely bullish trend. The market has been trending in the channel as indicated by the trend lines. 100 SMA has now joined the zone of heavy support around $600, with the middle bolligner, 9, 13 and 34 SMAs. Any short term bearish trades would be risky and futile in this period.

To get apt entry positions, let’s look into lower time frame:

short-term-analysis-4-hours

On shorter time frame (4 Hrs), the setup is trending in the channel of the trend lines shown. 34 SMA has been the line of constant support and has provided good entry positions for short term trades. When the 100 SMA slowly turned from being the line of resistance to line of support was an indication to get in for the break out trade. During this change, it also crossed 34 SMA signaling even strong change which was the best indication.

While taking long term positions, keeping an eye on Yuan would be very helpful.