Bitcoin Price Weekend Summary

We are getting quite close to a significant time frame in Bitcoin price history.  We have discussed in some detail…

We are getting quite close to a significant time frame in Bitcoin price history.  We have discussed in some detail over the past few days how the days just before Christmas are identified as an energetic time by a large number of Fibonacci accordions.  I am rather confident that the present days will mark an event clearly visible on both short and long term Bitcoin charts in the months to come.

It seems intuitively obvious that this time-frame will mark a low, rather than a high.  That seems  to be self-evident enough that it need not be expounded upon here today.  However, we need to consult the charts to be sure.  The charts have left clues, like Hansel and Gretel dropping breadcrumbs.  If we can see those clues and correctly interpret them, we stand to benefit handsomely.

Here is a multi-month 5-hour chart with a Gann setup in place.  Note the Fibonacci accordion with it's highly significant 1.618 marker falling on 12/22, just a few days from today.  The 0, 1, and 1.618 lines are highlighted in red for easy identification.

We also see that we are edging ever closer to the 5th arc of the setup.  The 5th arc of a (proper) Gann Square setup very often marks the end of a move.  We can also see that if price touches the arc on 12/22, it will touch the yellow line at $316 (bitstamp data).  If it bounces at that point, the chart will form a triple bottom.

A Change in Trend is Likely Approaching

Even without the benefit of the accordion, the 5th arc alone would alert us that a change in trend is likely approaching.  If we had neither the accordion nor the Gann setup, a triple bottom would be a great reason to get bullish.  We have all three at the same time.

We have seen in previous articles how the 'Gann Square of 9' suggests that $316 is a likely candidate for a significant low, when measured from the recent 454 high.  Looking at the chart above, we can't help but see a compelling convergence of Fibonacci and Gann that demands we pay attention.

Every day we read about more and more infrastructure being built to support an emerging Bitcoin economy.  Every week we read about large fortune 500 companies gearing up to accept Bitcoin as payment.  We see financial institutions such as MasterCard panicking as they are reminded of the fate of buggy builders, once Henry Ford started building the Model T in Dearborn Illinois.  We are nearing a historic tipping point. Speaking for myself, I can almost feel the winds of change getting ready to shift.

Let's blow up the last chart and make note of the top marked by the yellow arrow. Note how the market bounced at $316 in the  recent past, just as it cleared the 4th arc (blue arrow).  It then followed the arc upwards for an extended period. I will now illustrate how the market is indeed 'fractal', by making a new five candle Gann setup from that high.

From that highlighted top, I have identified a reasonable five candle setup. Note how the top of the square has been stubborn overhead resistance.   But what I want to point out here is that the 3rd arc of this setup is at the same place as the 5th arc is on the larger setup!  How is that for a fractal market?

On this (smaller) setup, we see the 2nd arc pair and (blue) 1x1 Gann fan have been controlling price for the past several days, forcing sideways movement.  However, the arc pair has run out of time.  Price must now either head down toward the 3rd arc or it must break above the blue 1x1 Gann fan line.  Time will tell, but I suspect the market will choose to break down.

As we saw in our last article, when / if we get to ~ $316, on ~ 12/22, the market will touch the support line running from the Elliott wave two and wave four lows.  IMHO, once price touches that line it will likely change course and head higher.  We will also likely see that any advance from that low will be in Elliott waves of five, indicating that wave 5 has begun.  That will be conclusive proof that the bear market has ended.  Up until now, we have not seen any up moves in (properly structured) waves of 5 since 2013.  I expect we will however, shortly.

Time will tell, of course.  We will continue to watch the charts closely.  If overhead resistance begins breaking (in all time-frames) before 12/22, we will close our shorts and reverse to long earlier than we expected.  In any case, stay sharp.  A major trend change will likely arrive within days now.

The price ratio page shows there are currently more buyers than sellers.

Happy Trading all!

Images from Shutterstock.

Last modified (UTC): July 17, 2015 3:43 PM

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Jim Fredrickson @jimfred1276

Jim has an MBA from the University of Southern California. He has been trading commodities, forex and bitcoin since 1993. You may email him directly at: jimfred1276 at gmail dot com. Feel free to follow him on twitter.

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