Daily Bitcoin Price and Market Update – Still Looks Weak

December 6, 2014 05:44 UTC

I trust a few of my readers profited from my suggestion to short the market the day before yesterday.  The Bitcoin Price has been timid due to the still unrevealed price that 50,000 BTC were sold at in the recent USMS Bitcoin Auction. Even with that in the background, our technical analysis still holds. Let’s recap why we made that call:

As you will recall, at that time we saw:

– That it was an “energetic time”, what some call a Fib time zone.
– The market had been stopped by an arc of resistance (2nd arc) and the top of the square, for two days.
– That same 2nd arc stopped the market dead in it’s tracks two weeks ago.
– The daily candle had closed red.
– The 4-hour chart was showing weakness as Gann fan lines of support were failing, becoming additional overhead resistance as they did so.

All these items considered together made the likelihood that the market’s break would be to the downside, rather than upwards. This conclusion proved to be the case.

Here Is an Updated Look at our Bullish Daily Setup.

The candle closed almost exactly on the arc. Don’t be fooled. This close is not yet bullish. A daily buy signal will come when / if we see a close above the top of the square, and/or on the other side of the arc pair.  Preferably both.

A few days ago we considered two possibilities. One was bearish, suggesting that the market had not completed the pattern yet. It still needed to touch the 5th arc to look beautiful and symmetrical. Then there was a bullish outlook, which was that the spike low of 275 finished the pattern by touching the top of the square.

At that time, I felt that of the two possibilities the bullish scenario was more likely than the bear. However, I changed my mind to short term bearish for all the reasons indicated in the bullets above. In fact, I took my advice and shorted the market. The market dropped 20 points shortly thereafter and has since retraced 78.6%.

Let’s Change Gears a Bit and Look at a 60-minute Chart.

This chart shows an eight candle bullish setup. But as you can see, it is not all that bullish.

  • The first arc pair stopped the advance at B.
  • C indicates that the top of the 1st square (shown bold to help you see it) has been pretty much a ceiling the whole time since then.
  • D is where we issued a sell suggestion the other day.
  • E is where the market fell again, just after clearing the arc pair.
  • F is where the market found support at the 8×1 Gann line.
  • G is where the market found resistance at the 4×1 Gann line, also 78.6% retracement.

The two stars on the chart, at the 4th and 5th arcs, are the time zones we are most likely to see a break. The 4th arc will be met ~ 10 hours from the time of this writing. The question, as always, is which way will it break? Is the market basing, preparing for a run to 400? Or is it preparing for a drop to 300?

Obviously I do not have a crystal ball and will rapidly change my mind if the market/chart suggests my current outlook is wrong. Since the market is always right, and I am not, I will change my short term outlook when/if the market starts to break above resistance that has stopped it up until now. A daily close above the top of the 1st square would make me bullish.

Looking at our bearish 3-hour setup we see indications of lower prices in the future. I trust that those who have been following my writing for the last week can understand the implications of this chart. Having closed below the 3rd arc, price has since been following the arc upwards.  However, I expect that to stop soon. Perhaps at the red 2×1 Gann line directly above if not sooner. Then I expect the 4th arc to be the next target, somewhere near the red star.

The present ratio of sellers to buyers is currently showing more sellers than buyers.

Summary

As always, we will watch the charts and change our position if the charts suggests we should. We should note that there are several areas of support on the shorter term charts where the market can be expected to rally. Regretfully, this venue does not permit me to articulate every nuance the market might take, even if I were smart enough to see them all in advance (I’m not).

Readers should know that I may be AWOL from these pages for a few days. I currently live in the Philippines and a typhoon is going to hit us very soon. My neighbors here by the shore are moving to higher ground for a few days – I will follow their lead. The local electrical infrastructure is far weaker than found in 1st world countries. It is a given we will lose electricity. Depending on the storm, and its aftermath, we might be without power for several days or more, so I may be unable to update these pages for a bit.  Stay sharp…

Happy trading all!

Disclaimer: The author trades bitcoin and has an interest in the direction the market takes.

Images from Shutterstock.

Last modified: July 17, 2015 15:41 UTC

@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.