This week, bitcoin continued in a correction; a pullback from a strong upswing that broke out of a 6 month long flat resistance at $316, 2 weeks ago.
“A market correction refers to a price decline of at least 10% of any security or market index following a temporary upswing in market prices” (around $ 284)
Thrusting above this significant level, exceeded market expectations, and escalating dumping and consolidation followed. As well as profit takers from long positions from lows. In essence, a correction at this level is a fair expectation. And, just as with most of them, volumes diminish with declining prices, suggesting exhausting supply.
Two important questions at this point are:
- How far down to expect on this correction?
- What are targets for next leg up
Corrections are more telling on the back of higher level time frame moves offers better magnitudes of corrective targets. Right now, they are all the consecutive lows supporting this move as far back as January.
On the 1 week chart, the fibonacci retracement of the whole range from $166 to $ 316, current support is at $ 280, reinforced at $ 276 by a 30 day EMA cutting across. The immediate step above is a resistance fib level at $ 316, and a pair of average line 50 and 100 day EMA. Breaking down would result in lower targets before heading up; any further rise above $ 300 has to overcome upper resistance and retrace the preceding 1 week red candle.
At the time of writing this analysis;
“The upside rally feels weak, market couldn’t even push above previous high before pulling back lower. People are selling the tops on tape. I will wait for an actual breakout to buy on the long side.”
Moving averages on lower the frames 3 day, 12h, 6h, 4h – are lined up consecutively down to $ 250; a reasonable target for this corrective move down if it continues, interestingly a target in an identified cup with handle pattern.
A 4 month old pattern dating back to $ 304 peak in March, curves round in a cup shape to $316. The handle is the 2 week decline from peak and represents a final pullback before the big breakout; anywhere up to 50% of the cup.
“Question is if we already sow the bottom of the handle. I think we did and that we just need to get some serious buying volume in next few days.”
With this move, expect a reversal from a bottom within a ranges up to $260. Recommended entry point for C&H is just above the cup – price breakouts past $310 accompanied by large volume. Buy on the upswing if you can handle the ride up.
Even the EWrs are expecting a move up to at least low target $320s for the final push 5th wave. In this method the handle of the cup is a corrective wave fourth wave preceding a rising fifth of a 5 wave move up (i, ii, iii, iv, v).
This week I am neutral to bullish with modest targets anywhere from $320 – $335.
BITCOIN FUNDAMENTAL NEWS
ibit exchanges announces Bitcoin OTC desk
New York based bitcoin exchange, itBIt, announced a parallel market – a Global OTC Agency Trading Desk for its clients interested in high volume purchases. Likely institutional and large investors, they will benefit from significant liquidity, same day settlement and no brokerage fees in addition to protection from slippage; a common occurrence in low liquidity exchanges according to Bitcoin Magazine
‘Many institutional investors prefer this because it allows them to execute trades without affecting the exchange order books or market prices.’
Naturally, more of such services lead to off – exchange trades and less real time public information on XBT trades. On the flipside, institutional capital gets a readily accessible channel for a digital currency assets acquisitions which is great for XBT long term.
Russian President Talks Bitcoin on National TV
Vladimir Putin, came close to admitting he owned some bitcoins, when addressing the subject on an educational forum broadcast national television – Russia 24. It has been a controversial matter in Russia, regarding its legal status and regulations surrounding its use following mixed tones from various state departments.
“We do not reject anything, but there are serious, really fundamental issues related to its wider usage, at least, today,” he said,
further adding that the Bank of Russia was exploring uses case of the blockchain technology inherent to Bitcoin. As with most comments by high profile figures, he spoke of wariness of its intrinsic value saying “not backed by anything”. Overall however, a substantially positive announcement.
BTC-e price flash spike to lows $150
In a flash crash on Saturday night, price on BTC-e declined to a shocking low $150 , taking out buy orders stacked from $ 270 level to month old orders at $200 and below. A similar event in August 2014, and its anonymous business operations do not inspire trust in the community. It is also highly illiquid and slow to deposit fiat.
“btc-e order book is so thin it wouldn’t take that many coins to create a giant crash. On bigger exchanges with more liquidity it would take millions of dollars of coins to dump down to the same price.”
Speculation suggests possible dumping activity, after ruling out possible rational explanations.