Where will the Bitcoin Price Bottom Out?

Journalist:
December 12, 2014

I have been asked both publicly and privately to speculate as to when and where the price will bottom. Speculation of that nature is risky, because it is so very easy to get the forecast wrong. Unfortunately, the nature of the internet audience is such that even if the forecast pans out, trolls will say it was a “lucky guess,” or otherwise find a reason to minimize that success. On the other hand, if the forecast proves to be mistaken, the mistake will be loudly heralded as proof positive that the analyst knows nothing at all.

However, there is a place in price-time which is increasingly appearing as a likely target, so I have decided to throw caution to the wind and postulate a public forecast.  It could be that explaining how I reached the conclusion will be the most valuable part of this exercise.

Needless to say, if/when this forecasted target is reached I suggest reversing to long very quickly.

Elliott Wave

Here is a 3 day candle chart which shows the macro version of my current wave count. Wave 4 is due to end, and wave 5 is due to begin, IMHO. (We will look at Elliott Waves in a future article – this is just setting the stage for the rest of the article. For those who don’t speak Elliott, wave five will be a bull market. Wave four was/is a bear.)

Long-term Support Line

We can draw a trendline of support underneath the lows of waves two and four, and make an educated guess that price will not break that trendline, given the emergence of wave 5. However, it WILL likely touch it, before the market reverses into the bull wave. As we can see, price is being drawn toward that trendline as if by a magnet.

Fibonacci Accordions Point to Christmas Week

We explored in the last article how there a great many Fibonacci reasons to expect the 12/22/2014 time-frame to be significant. This is to be considered along with the understanding that wave give, the next bull market, is due to begin in the near future. Might this be the time wave five begins?

Lets mark that date 12/22, on the chart, and note where the date intersects the long term support line. We see that the intersection of the support line and 12/22 price is ~$316.

What does the Gann Square Say?

Here it starts to get interesting.   I have made visible an eight candle setup on that 3-day chart. We can see that the point where 12/22 intersects the long term support line is exactly on the 5th arc. 5th arcs are notorious for ending market moves. Is this just a coincidence? Perhaps, but I rarely believe in coincidences when looking at market geometries.

This setup on a daily chart shows that the bottom of the current square is ~ $318. The bottom of the square is strong support. Note that the bottom of the square has supported the market TWICE in past weeks. If it bounces off that area again, it will make a triple bottom….

Gann Square of 9

Finally, when we enter the recent high of 454 into a square of 9 we see that six revolutions lower we find $316. This simply means that $316 is a strong candidate for a bottom.

Summary

I know full well that the market doesn’t care all that much about my opinion. At the same time the market cares very much, and follows very strict geometric laws of time and price.

Occasionally the market gives us enough clues that we can foretell the future. Is this one of those times? We will see. For all the reasons spelled out above, I am of the opinion that the market will make a long term bottom ~ 12/22. I am also of the opinion that the low will be ~ $316, give or take a couple dollars.

Whether I am proven correct, or grossly mistaken, I hope that some aspiring technical analysts out there will benefit from seeing how I reached the conclusions I have published.

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

Happy Trading all!

Images from Shutterstock.

Last modified (UTC): July 17, 2015 15:43

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.