Bitcoin price has broken the longterm rising trendline that has supported price on several occasions in the past few years. However, this trendline had been breached on previous occasions – each time prior to a strong rally.
Archers, Nock Arrows!
Despite the breach price has not entered freefall, instead making a gradual stairstep from $630 down to a higher low just above $610 on most exchanges’ charts. The current price action is unfolding between two trendlines projected from the November all-time high across the recent June high just above $660. The Bitstamp price chart is referred to throughout.
Additionally, a strong support level has formed at $611 which rejected decline at four touchpoints during the past three weeks – circled (in blue) on the chart below. This level is not guaranteed to hold if the bears mount a determined assault, but one can’t help wondering if this level – reinforced by the 200 period moving average – is not being set up as a launchpad.
A preferred Elliott Wave count is annotated in black, with the bearish alternate count shown in red. As explored in last week’s analysis, downside targets await at $540 and $450. To get there the bears will first have to rassle with strong support at $590 and then the 1000 period moving average.
The magenta circle to the right of current price action shows an area that the bulls will have to mount in order to escape the current descending channel that price seems to be caught in. Such a task is usually achieved in one of two ways: Go straight through the point where the trendlines intersect ($630), or go under-and-around the contentious area and overcome the obstacles one at a time.
Deja Vu, All Over Again
Most people would have noticed the similarity of the current wave structure to that of the second half of May, when price action slowed down to a crawl in a limited range between $430-$450 before launching into an extended rally to the June high.
Although May’s price action appears flatter in the chart below, the similarity in wave structure is unmistakable.
The 200 period moving average, in conjunction with a support level (at the exact same relative position in the wave structure), served as a launchpad for the ensuing rally, with the ignition having been a plunge below the longterm rising support line (dotted red). All of these conditions have been repeated in the current chart.
Bitcoin Price Lightning
Will lightning strike in the same place, in the same way, twice? Highly unlikely, but then again – this is Bitcoin.
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 to only take action in the market when you are 100% sure of your intended actions for the eventual outcomes. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this report.
Featured image by Shutterstock.