Since its late December low, the rally in the price of Bitcoin has been impressive. It moved up from a nadir of nearly $12,000 to a recent high of $17,200. That’s a 43% rally which, of course in crypto-currency terms, is a mild bounce.
The run has seen a series of advances followed by periods of lateral channel consolidations. Despite the unusual percentage gain for such a short time, the moves higher and then the digestion of those gains is a normal and healthy procedure.
A very interesting development in this process has been the the fact that the support and resistance levels that the channel consolidation periods have defined, coordinate very well with the Fibonacci retracements levels measured off December’s historic high and its “flash crash” low. These retracement levels are based on the “golden ratio” and the famous Fibonacci number series, popular with Mother Nature and stock technicians and chartists.
The asterisks on the 30 minute Bitcoin chart mark the Fibonacci levels of the December range, and they also delineate the borders of the three major channel consolidations during the period. Also, the height of these individual channels has measured the move that followed that particular channel breakout.
A breakout from Bitcoin’s most recent horizontal channel consolidation projects a target price objective in the $18,000 area, and a return to the final Fibonacci retracement level. This was a key December support and resistance zone.
That level might well be a psychological barrier where, if penetrated, the attractive properties of an old all-time high and a large round number takes over. Then the well-defined Bitcoin advance may be replaced by more customary manic volatility.