According to Shanghai- Reuters, Li Wei, a Chinese Central bank official, stated that commercial banks should speed up the adoption of blockchain technology in digital finance. Li’s statement came after a similar statement made last week by China’s President Xi Jinping.
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The event resulted in a sudden increase in buying volume across the crypto industry, with Bakkt seeing an increase in the volume of about 257% within 24 hours on October 26.
Should we be looking at a continuation of this initial price hike? Let’s advance to analyze the charts and identify critical technical drivers of the Bitcoin (BTC) price.
The BTCUSD has been in a correction Wave-2 for three months now, flagging a bearish accumulation pattern at the closing price of August. If the demand for Bitcoin persists and brings the price to close above the $9,320 significant level by the end of October, then the September bearish price close would be a bear-trap pattern.
We should look forward to the impulse Wave-3 at the close of October, which is often the most prolonged wave in the Elliot wave cycle. A new all-time high above $13,880 is highly probable, as we enter the next months in Q4.
Last week’s bullish candle closed above the bearish accumulation resistance $8,531.25 of September 30 ’19, a first since the 2019 all-time high of $13,880. The October 21 bullish closing bar also signaled a bullish engulfing closing candlestick pattern, suggests an end to the three months price correction and an upbeat campaign beyond the local all-time high.
The regular bullish divergence pattern triggered in combination with a breakout of bearish accumulation resistance $7,512 on the daily time frame reflected exhausted and overextended bearish activity. Subsequent daily price close above the MA-50 and the bullish accumulation pattern formed yesterday, October 27, reinforced the confidence to maintain a bullish position on BTC.
So, we round up with the 4-hour time frame where the price again breaks above a much smaller bearish accumulation resistance $7,499.50 on October 25 08:00. The breakout pattern was initialized as the BTCUSD came out of the oversold area on the same day.
After the 36% price increase from the breakout level, the BTCUSD corrected the gains to later signal a bear-trap candlestick formation on October 26, 20:00.
A break out of double bearish accumulation resistance is anticipated at press time. If this takes effect, we may see the price skyrocket beyond the $10K round-number resistance.
Conclusion and Projection
Trading is a probability game, and the top-down analysis carried out so far confirms the likelihood that the Bitcoin price will attain break and perhaps trade beyond the $10K level.
The weekly time frame, in particular, shows a stable bullish outlook with a projected first target at $14K and the second target at $16K. The stop-loss level should be set at the $6K level for capital preservation.
We suggest that you do not bet the farm on a single trade signal and trade with proper risk and money management practice when entering a long position on the BTCUSD.
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