It is ten months to the day since China's PBoC announced restrictions on the exchange of Bitcoin. It is a popularly held belief that this event had preempted the Bitcoin price decline. However, few people are aware that the all-time high occurred five days earlier on 30 November. The Bitcoin price had already been declining for five days when the news came out of China.
Also read: Why the Bitcoin Crash Below $500?
We are now at a time when the price chart's internal structure is busy concluding the entire decline since November last year. An uncomplicated wave count of the larger wave degrees looks like this:
The current wave, wave E of wave IV, is counted as a (flat a-b-c) correction. Wave E has the same function as wave C, which, in this context, is to progress the downward corrective trend. They share similar wave patterns in their respective c subwaves, although subwave c of wave E is more complex and has, therefore, taken longer to cover the same vertical distance.
A benefit of wave E being complex is that it is well articulated despite having wasted a lot of time hopping trendlines. Wave E is counted with the interpretation that it's 5th subwave had extended. Comparing wave C and wave E it can be seen how they have similar subwaves, despite their different wave counts. Had subwave b of wave C been less pronounced, it might have been possible to count wave C in a similar manner to wave E, but the deciding factor is their overall structures. Wave C is best-described as a zig-zag and wave E as a flat correction.
The Bitstamp chart, below, shows that $260 and $200 still present decline targets, as well as a long-term ascending channel trendline presently cutting through $170. However, with the way price had settled above $300 earlier today only to be pushed $25 lower (within minutes) due to the onset of heavy selling... any arbitrary low is possible with these centralized exchanges. Hopefully, the last low ($275 on Bitstamp) was low enough for the majority of market participants.
Notice, on the chart, the various indicator and signals of imminent reversal to an uptrend:
Once above $400 - and maintaining advance above the 200MA - only then will we have confirmation that the advance is underway. That is unlikely to happen before the full moon on 8 October. In the meantime, catch possible new lows with exchange buy orders at $260, $200 and the lower channel trendline.
The probability of advance increases if price can hold above the $300 psychological level. However, don't be too aggressive buying into the market as price initially climbs atop $300 and begins rising - it will retrace soon enough and the manner in which it does that will tell us more about its intentions, as well as allow us to determine targets to the upside.
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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 (UTC): July 12, 2015 10:53 AM