Bitcoin Price to Test $400

Stock valueThe Bitcoin price appears to be hanging precariously on the edge of a cliff. However, the failure to decline from current levels strengthens the case that a move up is due.

Update

Time of analysis update: 19h35 UTC
A strong surge to the upside is approaching the 1.618 target at $398. The structure of the advancing wave is unusual and it will be interesting to see how it develops. The momentum of the advancing wave implies it will advance beyond the 1.618 Fib extension - if not today, then after a retracement. A resumption of the larger decline seems unlikely today.

Bitstamp 15-Minute Chart

Bitstamp 15m chart 1Oct2014

Bitcoin Price Chart

Time of analysis: 11h40 UTC
As a reminder of yesterday's update, we are expecting a move to the upside to retest the broken support near $400. Depending on how it completes this move, we'll assess whether advancing to $420, and $440 is possible.

Bitstamp 15m chart 30Sept2014

We now have an initial wave to the upside that allows us to determine the Fib extension targets shown on the chart above. The 1.618 Fib extension is at $398 which is below the orange trendline running overhead - a slight discrepancy that we'll have to wait and see how it resolves. Two of the many possibilities is that price action will target 1.618 below the trendline and then reverse back down, or it may slowly proceed to the 2.618 Fib extension where it intersects with the rising trendline around the second week of October.

The blue C labels on the chart indicate two approximate endings for a corrective wave up. However, let's focus on the first 1.618 Fib target near $398 before plotting any targets beyond.

Long-term Comparison: Bitcoin and Gold

The Bitcoin and Gold charts display similar wave structures at all timeframes. The Bitcoin chart covers late 2012 - present and the Gold chart 1991 - present. At these large timeframes, the monthly Gold chart can be seen to complete advance and decline over years, whereas the weekly Bitcoin chart makes moves of equal magnitude over periods of months.

Bitcoin_Gold_30Sept2014

As the Bitcoin chart matures, and larger degree wave action sets in, it should slow down, and its rallies and corrections unfold over longer periods of time.

Summary

Anticipate a move toward $400. Price may push higher, but we wait to see how the 1.618 target is achieved and then reassess.

Economic Data

Earlier today China's HSBC Final Manufacturing PMI was posted at 50.2 - slightly lower than the expected 50.5. Tomorrow, the China Manufacturing PMI as calculated by government will be released. Government expects a slightly higher figure at 51.1

Today also saw the quarterly UK Current Account print at -23.1B as opposed to the expected -16.9B. A country's Current Account is the difference in value between imported & exported goods, services, and income flows. The dismal UK figure sent the GBP/USD exchange rate plummeting to 1.617 which is a retrace of all of the gains made following the "No" Scottish Independence referendum.

GBPUSD 1h chart 30Sept2014

Gold is approaching $1200 during the European trading session, with stocks - of course - rallying off their lows. Meanwhile, in the Hong Kong business district student protest in support of the Occupy Central movement continue. There is no sign, yet, that Beijing will get involved to quell the civil disobedience.

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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.

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Venzen Khaosan

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect.

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