Hello, TradingPedia.com, and welcome back! We’re going to be talking about crypto currencies, namely Bitcoin and Ethereum, in this video. And what we want to do is take a look at what might be some levels to consider for the course of 2021. And so we’re starting off with Bitcoin. I’ve got this weekly chart showing a price channel.
Overview
Now, when you’re looking at crypto currencies, make sure that you are looking at a logarithmic scale rather than a linear, simple, or arithmetic scale. That’s going to be super important when you’re looking at cryptocurrency charts.
Logarithmic basically compares percentage gains of the past to percentage gains of the future or percentage gains of the current market relative to the percentage gains of the past. And that’s very important to identifying some of these patterns.
Bitcoin Price Channels
If you were to apply these price channels on the linear arithmetic chart, you’re going to see completely different patterns out there. So one crucial point there. So we’re taking a look at Bitcoin and within Bitcoin, what I’ve done is simply draw this price channel. Notice that from basically 2013, prices have been contained inside this price channel. What really sticks out to me in the recent correction in Bitcoin is of no surprise.
What sticks out to me is how prices have been respecting this price channel and most notably how prices have been respecting this midline. So this recent rejection that we’ve seen within Bitcoin, in my opinion, is just simply the price coming up and respecting this midline.
So after a bit of consolidation, I believe we are going to see Bitcoin crank up and push up through this midline and possibly work itself up towards the upper end of this channel. Eventually, after it broke the midline, it does come up and look to the upper end of this channel.
The upper end of that channel is well into the six-figures amount, and that may take a couple of years in order to get there. So longer-term for Bitcoin, I believe that this is providing an opportunity to perhaps position one’s self for a long, long, long note for it over the course of 2021.
Ethereum Price Channels
Now, looking at the weekly chart for Ethereum, Ethrereum does not have nearly as much price history as Bitcoin, but there are still some things that we can gain by looking at Ethereum. So, first of all, one thing I want to point out is how we’ve got a higher low in place.
A low was reached in 2018. The price came down and came close to reaching that low, but did not. We have a higher low in place and now we’ve come up and we’ve just barely pushed up above an all-time high here in recent days.
Now, we haven’t been able to sustain this push into all-time highs and this is nothing unusual. It’s very common for the price to come up. And when it’s reaching a significant mark like this previous all-time high, it’s going to dance around here for a while.
And that simply means that the market is respecting this previous level of resistance. Might it dance around for a couple of days? A couple of weeks? Yeah, something along those lines. But I think the crucial area for Ethereum is this thousand-dollar mark. So any dancing that takes place, you know, will probably be held above this thousand-dollar mark.
So it might consolidate sideways. Then, eventually, I think we’re going to see a breakout higher. So much like what we were talking about Bitcoin a moment ago, where Bitcoin is respecting that midline, Ethereum respecting this all-time high may offer the opportunity in order to position in to the long side.
Eventually, I see these breaking up to the upside. I believe any dips may be fairly well contained and bought into. I’ve got a really nice price channel here. I don’t want to leave this out of the video as well. Very nice price channel where prices have respected it at several points along the way. So, for example, we’ve respected the line here. We’ve respected this price channel here.
So we’ve got several instances where this price channel has provided an area of support and resistance and this channel is going to continue to push higher. I don’t know if it’s going to squeeze back inside this channel or not. Previously, it squeezed back in only for temporary instances.
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Conclusion
So that’s all I have for today. I want to wish you all the best of luck in your trading. Good luck out there. We will talk to you soon. Take care. Bye now.