As many of you know, Bitcoin Price and Bitcoin Value don’t follow each other perfectly. Yesterday’s Bitcoin Price decline is leveling out as corrective waves are increasing their upward trajectory. The resulting wave pattern is out of character with that seen during the past year. Is the new price action a sign of a trend change? Obviously, the news of Bitstamp reopening will allow the Bitcoin trading volume to re-assume proper levels and trends to continue.
Bitcoin Value vs Bitcoin Price Analysis
Time of analysis: 13h00 UTC
BTC-China 5-Minute Chart
The BTC-China 5-minute chart is shown zoomed-out to get a bird’s eye view of yesterday’s decline. The downward thrust of declining waves can be seen clearly, interjected with zig-zagging corrective wave reaching, in vain, to the upside. However, notice how the function of the previously corrective waves is changing as the wave has progressed. By now the corrective waves are turning trend back up as the previously declining waves are losing down-thrust. Their respective functions seem to be phasing over as the day progressed.
The magenta trendline cutting through the price action is the lower end of a price channel that contained trend since Sunday. I mentioned in yesterday’s analysis that if price could get back inside that channel it would fit the role of an Elliott Wave 5 to higher highs. Price seems to be clinging to that channel with this very intention.
However, textbook Elliott Wave Principle is something that Bitcoin price regularly defies. Some people remark that it’s because Bitcoin is “too new”, or that a ponzi scheme cannot be understood via technical analysis! (I’ll reserve comment and put the matter up for reader discussion). The truth is that some charts just do not fit the orthodox Elliott Wave mould: Bitcoin, Gold and the EUR/USD charts are the most obvious examples.
EW analysis may require BTC-China’s price to “get back in the box” in order to advance (or else drop away), but the next chart shows a dislocation.
BitFinex 5-Minute Chart
Again, a 5-minute chart, at maximum zoom-out. The BitFinex chart has a very clear (and orthodox) channel defining its 3rd wave. The first wave may be a leading diagonal, but the last wave of price action down to today’s levels breaks far out from any channel around the wave action since Sunday. I’ve not drawn a larger containing channel because there is none in the BitFinex chart.
This means that the wave structure since Sunday could be corrective and that we are gearing up for a last wave of decline (Oh, Lord..) or that the BitFinex chart is showing us the shape of things to come: sideways consolidation. Notice that price never strays far from the red 200-period moving average. Its apparent trajectory is indicated with a red arrow to the right.
If that is the direction, then price is heading for a second intersection with the rising long-term support that rejected it on Sunday.
Bitcoin Price decline has halted and has turned sideways during today’s trading sessions.
Price is currently at $286 (BitFinex) and 1,738 CNY. These price levels are ludicrous given Bitcoin’s multi-year trajectory; snowballing Bitcoin value and the price potentials evident from the long-term price chart. With or without another low, these price levels will be a laughing matter in the near future.
Buy-and-hold investors may consider purchasing at present price levels (below $300) and leave some capital aside to buy at discount should a last wave of decline see price dip lower into the $200s.
Traders should keep an eye on which side of the 20MA price trades on in both the 15-minute and hourly charts.
CCN hosts an interactive Bitcoin price chart and market metrics such as this BitFinex Buy/Sell volume indicator:
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The writer trades Bitcoin. Trade and Investment is risky. CCN accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.
Images from Shutterstock.