Bitcoin Price Analysis
Time of analysis: 10h00 UTC
Jim Frederickson had successfully forecast a price low of $305 (Bitstamp) on 18 December. His forecast included a remark that the Bitcoin price chart is unlikely to launch straight into a rally and that a subsequent break below $300 may witness another sell-off.
With no definitive indications in the chart, the matter of Bitcoin price direction remains unclear in the short-term and we may have to wait for the end of the holiday season and January 2015 for price to show clear direction. During the first weekend of January, we will review the longer term Bitcoin price charts and take stock of price's options for 2015.
Bitstamp Daily Chart
The daily timeframe chart above shows the influence of medium- and long-term trendlines on price action. The level of the April 2013 top at $260 (Bitstamp) remains untested and a rising trendline (red) from 2011 will, no doubt, be tested during the coming weeks.
Magenta annotations illustrate how the low of 18 December had made a lower daily candle close than the low of 5 October. This lower closing low is not confirmed by the RSI and MACD indicators - a divergence that prompted a brief upward price reaction. The resulting move reached $338 before losing momentum and retracing 62% of the advance.
Bitstamp 4-Hour Chart
Having retraced 62% of an apparent 5-wave advance from a significant decline low, we would expect price to launch into a stronger 3rd wave to the upside. However, this has not (yet) occurred, and we are left clueless about price's intention in the coming days.
Fibonacci fan lines are drawn from the recent high and show that price is caught between the .5 and .76 lines, seemingly crisscrossing the .618 line as it slowly descends.
In contradiction to the daily chart's divergence, the 4-hour chart did not form a lower candle close on the 18th although RSI indicates a lower low on the lowest candle close - reverse (or "hidden") divergence (magenta) that implies continuation to a higher high above $340. We'll get back to this indication in early January or when price trends that way.
Price is apparently meandering near the decline lows in quiet end-of-year trade.
The clearest chart indication is the Fib fan channel that has contained price action since late November. It may continue to do so until price reaches - and reacts to - the rising long-term supporting trendline from 2011 (red).
Alternatively, we may see price either break above or below this channel in a low-liquidity surge. This analyst's opinion is that price may likely draw sideways for a few days and climb atop the channel in consolidative trade.
There is too much risk in going long above $300 until trade establishes above the .5 Fib fan. The risk of entering a trade anywhere below this line (in the hope of catching the lows) is that sideways-to-down trade may either incur swap-costs (without any chance for profit taking) or that end-of-year low liquidity spikes downward.
No need to be hasty since there will be plenty of pips to be gained from whatever move transpires.
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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.