Posted in: Archive
Published:
October 6, 2014 6:15 PM UTC

Bitcoin Price Advance: Launch or Wipe-Out?

The Bitcoin price drop below $300 during weekend trade has been the cause of much consternation in the Bitcoin community. Disgruntled exchange traders are calling foul; accusations of price manipulation and collusion between exchanges abound; and, some feel that the market has finally gone to…

The Bitcoin price drop below $300 during weekend trade has been the cause of much consternation in the Bitcoin community. Disgruntled exchange traders are calling foul; accusations of price manipulation and collusion between exchanges abound; and, some feel that the market has finally gone to pot with no price-low being off-limits. Let’s get to the charts and see what they reveal.

Big Waves Roll In

Weekend analysis showed a wave count of the entire correction since 30 November 2013. The wave analysis is done in the context of the entire Bitcoin price history, and the formation of a corrective triangle in this wave position is auspicious.

The corrective triangle is structurally sounds as well as technically near completion – if not complete already. What’s more, a triangle typically occurs in the wave IV position of a larger five wave structure and we, therefore, anticipate wave V to the upside. And it promises to be big – but everything in it’s own good time – first, we await 1) confirmation that the decline is complete, and 2) confirmation that trend has reversed to the upside.

Confirmation of Bitcoin Price Advance

Time of analysis: 13h00 UTC

As previously explored, the Bitcoin price chart’s advancing mode is characterized by a price slingshot from the 20-period moving average (20MA) to the 200-period moving average (200MA) effected in the 4-hour timeframe. As can be seen in the 4-hour Bitstamp chart, price is currently bumping up under the 20MA. This particular zone between $320 and $335 is a significant obstacle because it contains a confluence of a previous $3.618 Fib extension, as well as a multi-year support and resistance line rising through $326 straight above. The latter support/resistance line has been asserting its influence on price since 2011 (and perhaps earlier).

If the current wave is the start of an advance then it should mount the 20MA, react to the 1.618 Fib while maintaining trade above the 20MA and then proceed to the 200MA near $400 with thrusters on full burn. Anything else will give us reason to expect resumption of the decline.

Trader, Cover Your Backside

Notice that Sunday’s decline low did not halt at an identifiable Fib level. It may be that a much older Fib enforced it’s presence at $275 or perhaps the roundness of the integer imposed a psychological barrier – either way, two Fib extensions lie at $259 and $205. They would be targets if decline were to return. Also, Sunday’s analysis showed how BTC-e did not reach it’s triangle lower trendline. This raises a question mark over whether or not the decline is truly complete.

While price action remains below $400, we have little reason to believe that the decline won’t resume. Getting above $400 is not going to be a straightforward or straight-lined affair. Once the 200MA is tagged, price should retrace 60% or more of the advance.

For now, we look ahead but with one eye on the rear-view mirror.

Global Economy

Spot Gold dropped to $1183 at the market open and reversed. The low was accompanied by crushing divergence in the MACD indicator (annotated in magenta) as well as in RSI (not annotated).

Gold is also in a longer-term corrective triangle (wave IV). What is concerning – just like with the Bitcoin price – is that the Gold price low did not touch the lower triangle barrier (purple) at $1181. The incomplete low therefore leaves the advance with a question mark over its head. In the medium-term Gold should now complete the last wave correction to near $1340. The upper triangle trendline is visible at the top right of the chart.

As is the case with the Bitcoin price, the Gold price must still confirm advance.

[divider]CCN[/divider]

CCN hosts a summarized Economic Calendar showing the week’s main data releases.

Readers can follow Bitcoin price analysis updates each weekday on CCN. In-depth analysis articles are published every Sunday.

Disclaimer

The writer is fully invested in Bitcoin via BTC-e and Bitfinex. Trade and Investment is risky but not as risky as some other things out there. Take care only to take action in the market when you are 100% sure of the outcome. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this Bitcoin price analysis report.

Bitcoin price charts from TradingView.
Images from Shutterstock.

Last modified: February 13, 2020 3:45 PM UTC

Venzen Khaosan @venzen

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.

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