XBT / USD weekly price range forecast 740$-970$ | The main resistance is the first positive deviation line of the  VWAP at 970$, about support I think is valid the first negative deviation line at about 740$.

I have doubts about whether or not the VWAP can hold the price for a second time after stopping the previous drop from the high of January 3. I believe that during this month we might see the price slowly drifting down to 740$.

The average daily RSI oscillator moved below the overbought zone technically giving a sell signal but for the moment I decided to ignore it waiting to see if the price will remain above or not our main support, the VWAP.

In case of extreme fall the support is the price area between 580 and 660 USD.

Italian version here at bitchanger.com

I think that XBTUSD is rebalancing itself after what i consider a buying climax bar of January 3.
It’s very important to stay above our mid-term VWAP at 840$ but considering the high volatility of these days it’s not excluded a test below it, eventually down to $720.

This price zone (720$-840$) might be a good spot where to buy because the overall trend is still up. I don’t think this drop will continue down to the yearly support of 500$ that i wrote about in the 2017 outlook of few days ago.

The daily RSI has been overbought for a prolonged period and its reading is around 50.

The situation with a very short term VWAP (7 days) see XBTUSD in a weak position below our average. With a move above 1010$ XBTUSD would regain some bullishness in the short term.

Every beginning of a new year i post an outlook using entropic methods explained in the technical section of this blog. Here you can find the 2015 and 2016 forecast update, where you can find more information about this approach.

Updated values for bitcoin (in brackets values of last year)

	BTC/USD
Growth Factor G	1.000722 (1.000166)
Shannon Probability P	0.519 (0.515)
Root mean square RMS (see this as volatility)	0.045 (0.053)

Bitcoin’s entropic values versus the Usd improved a bit in 2016, with volatility that is dropping and a larger value for the growth now 0.000722% compounded daily or 30% yearly growth up from 6% of 1y ago. Also the optimal fraction of your capital to invest in bitcoin improved in 2016, to minimize risks you can invest in bitcoin up to 6.4% of your total wealth.

2017 Price forecast	Full volatility	Half volatility
Forecast using only G*	~1235$	~1235$
Upper bound adding volatility	~2900$	~1900$
Lower bound subtracting volatility	~520$	~800$

*1320 is obtained with today price (around 950$) times (1.000722^365)=~1.30
950*1.30=1235, just change 365 with the number of days you prefer for a different forecast.

Conclusions

Also for this year i recommend to consider the support/resistance levels obtained with a halved volatility value with the result to have for the whole 2017 a good probability to stay inside the 800$-1900$ price zone with a strong support at around 520$ in case of panic selling.
At the same time i think that at the end of a strong buying climax period, if any, it will be difficult to see the price of a bitcoin over 2900$.

I want also to emphasize the fact that year after year the volatility of Bitcoin is falling although it’s not yet at the level of traditional investment assets like stocks, neverthless this is a good sign and it tells us that bitcoin as an investment asset is improving.
To give you an idea consider that the volatility of the SP500 index is 6 times less then Bitcoin and a stock like Apple is 3 times less volatile then Bitcoin. Keep in mind that during the 2013 peak bitcoin volatility was twice what it is now.

I’m at your disposal for any questions; see you at the next update and Happy New Year!