The BTC-China hourly chart shows today’s decline across the magenta channel lines we introduced in yesterday’s analysis. Bitcoin price had targeted a pivot level at the upper channel trendline. The BTC-China chart turned just below the pivot (1,805 CNY), and the BitFinex chart exceeded the pivot ($298) to a high of $303.
An orange arrow shows that the BTC-China high also corresponded to a 1.618 Fibonacci extension of the first wave up from Sunday’s low (drawn at left of the chart). Bitcoin price tends to favor .618 Fib ratios when trending (up or down).
The low struck earlier today corresponds to the level of the first wave’s high near 1,710 CNY. The BitFinex chart declined to within $2 of this first wave high at $280.44. The reason for comparing today’s low to the first wave low is that there may be a clue regarding wave count and price action going forward. In Elliott Wave Principle, the first wave and fourth wave may ordinarily not overlap each other’s price territory. BitFinex meets this criterion, but BTC-China, given its slight overlap, is borderline.
The adherence of price action to a channel with parallel upper and lower trendlines implies that we may see another wave, namely wave 5, of advance. If advance recommences, price will aim for the upper channel trendline again. This will also serve as one of our confirmation that a larger uptrend is in progress.
“Adherence” to the channel means that price must get above the lower channel trendline and establish trade above the green 20MA and blue 50MA. Until it does, we have no certainty of price direction.
If price fails to make a new high and drops out of the magenta channel to lower lows then the advance of the past few days had simply been a correction in the longer-term decline. In case of the latter, we would expect the decline to resume to $200.
However, there is no confirmation that this is about to happen. On the contrary, if price can get back inside the channel and above (at least) the 20MA in the 15-min and hourly charts then we have continuing bullish bias.
CCN hosts an interactive Bitcoin price chart and market metrics such as this BitFinex Buy/Sell volume indicator:
Despite the decline BitFinex’s 24hr Buy/Sell Volume remains almost even. The hourly volume reflects heavy buying after today’s decline low.
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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.
Last modified (UTC): July 12, 2015 12:16 PM