Bitcoin price action has, during the past 24-hours, seen a lower low (for decline since 21 August) established across most exchanges. Although indicators are stretched to the max, additional downside is on the cards. Analysis, below, considers the options.
Bitcoin Wave Structure Recount
The Bitstamp chart below shows the lower low established during trade today. This has occurred across all exchanges, and unless price turns up from current levels, we will be best-prepared to anticipate eventual decline to $412.
The wave count has been adjusted to accommodate the new low and make provision for another wave down. The decline is running out of both indicator space and wave labels. As mentioned in yesterday's analysis update, each downtick is increasing the chances of reversal to the upside.
Declining price action is proceeding with visible difficulty and the MACD and RSI indicators are in advanced stages of divergence, implying that some upside relief - if not reversal - is due. However, do not rely on trade to heed full-tilt indicators because the last stages of decline can stretch them beyond recognition.
Targets wait at $438 and $412, the latter reinforced by an overlap with the monthly pivot S1 level. Having ranged for two weeks in a sideways consolidation, price action offered no confirmation of advance nor shown any sign of letting up from its eastward journey. Only once the arching decline became apparent, did our scenario for decline to $412 come back into focus. However, price could reverse before reaching lower, and a confirmatory sign we want to see remains advance out of the declining channel (blue).
BTC-e Front-Running Bitcoin Price Decline
Leverage trade at BTC-e is probably the cause of this devastating drop, shown in the 15 minute BTC-e chart:
The lower 2.618 Fib extension target lies at $433 and the 3.618 target is at $413.
China shocked the market yesterday by announcing that the PBoC will make available a Short-term Lending Facility of 500bil Yuan to the nation's top banks. Stocks and currencies adjusted to the "stealth QE" measure with strong rallies. Interested readers can see more here.
Today's UK Unemployment Claimant Count Change figure shows that 37.2K fewer people claimed unemployment benefit during August and the Unemployment Rate fell to 6.2% from last month's 6.3%.
Meanwhile, the UK Monetary Policy Committee Asset Purchase Facility Votes and Bank Rate Votes came in as expected. No change.
US Data Shocks
US Core CPI (month-on-month) came in at 0.0% with the Core Consumer Price Index printing a negative number for the first time since November 2013. US Core CPI is at -0.2% which, simplistically, implies deflation. This is additional bad news to yesterday's US Producer Price Index, which also came in at 0.0%.
CCN hosts a summarized Economic Calendar showing the week's main data releases.
Updates to this article will be made during the European and US trading sessions should any significant events come to light.
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.
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