Last week, I wrapped up my Bitcoin analysis with a forecast of a successful test and break of $ 300 resistance. Unfortunately, events unfolding after publishing catalysed a break to $260. News of Evolution’s stolen bitcoins, possibly spooked the market and gave it more reason to head lower.
A meltdown that began by breaking $283 level, further going on to break consecutive levels at $274, $ 262, $ 250 and now at $236. The market consolidated in a triangle pattern at $ 260 and a break out pushed up to $272, however. It was not strong enough, allowing the stronger bear market to drag prices lower impulsively.
4xForecaster a trader and an elliot wave theory perspective shows how this wave pattern formed. Typically, EW waves take 3 wave/ 5 wave structures. Within waves there are subwaves labelled similarly. A move up from bottom 4 led to a final flat bear correction and last move up – wave 5. Bitcoin scam news was a trigger.
Looking at channels and trend lines, a head and shoulders pattern formed within a channel extending from bottom $166. The first shoulder attempt testing channel resistance, followed by a head breaking out of the channel and a final shoulder that failed to break $ 300. Lower channel support has been pierced and now getting tested at $238.
We are now staring at retesting lows from a month ago. $ 220 is a real possibility, just from looking at support levels to the ‘supposed’ bottom. I believe we are very close to finding bottom. Read on for our weekly price forecast.
Bitcoin wall street money
A significant piece of news this week was Noble’s plans to integrate NASDAQ to digital currency asset trading. Noble, a Fintech start-up founded by ex- Goldman banker, John Bett, is bridging the gap between traditional trading systems and digital currency exchanges. The Wall Street Journal reported the announcement by NASDAQ; a partnership with venture backed Noble. Noble aims to bring liquidity, volumes and decrease volatility; preferring to work with bitcoin exchanges by linking institutional investors.
Betts was quoted on Coindesk
”We’re not trying to fight for a slice of the pie, we’re building the venue where the large capital that exists in the capital markets and corporations that use these products as part of their business needs, where we can provide that liquidity to other exchanges. The goal is to create a larger pie.”
Neteller now accepts bitcoin deposits
Neteller, a European online payment processor from the UK, now allows customer deposits via bitcoin through its partnership with BitPay. Neteller enables customers in over 200 countries to transfer money, pay merchants, make deposit into forex trading, online gambling and generally, e-wallet stored value. Just last week, forex magnates reported the company’s 1.1 Billion Euro acquisition of one of its major rivals, Skrill. At the time of going to press, this announcement is not official, however. Some users of this service across Europe have reported a change on their interface with an added option to deposit with Bitcoins.
See one image below:
This announcement might pressure other payment processors (like PayPal) to consider bitcoin deposits.
LHV Bank partners with UK Bitcoin Exchange Coinfloor
Another UK financial services company, Coinfloor announced a partnership with LHV bank of Estonia, calling it a pro- Bitcoin bank on its blog. 18 months of management and compliance diligence work was put in to make this deal possible. The UK’s announcement to enforce AML regulations on digital currency exchanges bodes well for bitcoins start ups and partnering with banks.
Weekly price forecast
As I pointed out earlier, consecutive failed attempts at breaking out of a channel means there is still more time to accumulate coins. The current pullback is a retest of $235 – $240, and could produce a form for excellent shorting opportunities. Lows of up to $150 could follow, and I would not advise any long positions, regardless of a bit upside potential, a view shared by chessnut on Trading view. A 3 – wave EW correction followed by an impulsive break to test the low – $ 166
The long term trend is still bearish, at $321 and $ 340. Price was held back by upper resistance (purple arrows). This rally has been part of a correction of an overall move down, similar to October’s $475.
Bar any news, two key levels are decisive. $ 236 as support should hold well for a convincing bottom. Buyers are aware of the bargain at these levels and i would expect a battle at this level. Any weakness below $ 236 will reaffirm monthly downtrend, meaning weekly uptrend would be failing and a massive sell-off would follow. The market’s memories of these levels are fresh from January’s capitulation. Traders would sell off and pick a bottom for long entry positions. $166 may well be broken.
On the other hand, a slim chance of rebounding would have to hold strong at $ 236/ $ 243 levels and invalidate resistance at $ 275.
This week I am bearish.