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Bitcoin Price Analysis August 23

This week the price of bitcoin was fairly stable, mostly trading in a sideways $ 20 range. Despite a low dip to $552, bitcoin quickly retraced back up. Buying intent seems subdued, as it seems most money is on the sidelines waiting for a clear signal. Perhaps the most exciting bit of fundamental news this week was the release of Bitcoin Core Software version 0.13.0. It features code intended for deploying SegWit, a soft fork transaction capacity solution.

1

Last week’s bottom at $556 was not the final one. As with most bottoms, a double or triple bottom structure confirms a bottom. Price went up, then headed back down for a retest of $555. This paved way for a brief run up to $579. The resistance at this level held well and price moved sideways for the rest of the week.

The short term trend up held well but, as of writing this, trading is still below $604 resistance. Just before the most recent rise to $583, a sell off to $552 on August 19th confirmed another bottom. A classic candlestick hammer pattern, well known for marking bottoms.

2

A rising trendline from $465 on August 2nd is supporting a gradual price move up. $600, a resistance level on the 6 hour chart is the target for a break up. I expect a retest of this level after breaking past $580.

3

Exponential moving averages on the 6 hour time frame also point to a break up, at least up to $595 where the 100 EMA cuts across. Already, candle prices have squeezed and broken past the 7, 30, and 50 EMA.

BITCOIN FUNDAMENTALS

The United Kingdom Champions Blockchain Innovation

The United Kingdom (UK) has been on the frontline of supporting Bitcoin innovation under a broader FinTech theme. The Bank of England is planning a Central bank digital currency for example. The UK is also home to the only Bitcoin company, Circle, to receive an electronic money license.

This week the UK Financial Conduct Authority said it is considering approving blockchain business within a structured regulatory sandbox. Here, blockchain companies will be allowed to test and roll out products with temporary FCA authorisation.

Chris Woolard, the FCA’s director said of it

“We do think blockchain has got some potentially interesting applications and we are talking to firms thinking about how to apply that to financial services”

Twitch Video Streaming Platform Integrates Bitcoin Payments

Twitch, a live video streaming platform for gamers and streaming has reintegrated bitcoin payments as one of its payment methods. Twitch lets users pay with bitcoin from normal addresses and wallets or a choice to use third party payment processors like Coinbase.

This is the second time the company is integrating cryptocurrencies, the first having been in 2014. Content creators can now monetize their digital content in Bitcoin.

The Amazon owned company has fueled speculation on whether the e-commerce giant would consider accepting bitcoin payments for its Amazon based services in the near future.

Next Bitcoin Core Software Update to Feature SegWit

Segregated Witness, a soft fork solution proposed to increase the volume of transactions without altering the block size is close to release. Verson 0.13.0, which was released on Monday August 22, includes code that will be key in deploying SegWit in version 0.13.1. According to Coindesk

“SegWit will ultimately be triggered with a soft fork, in which the majority of the nodes need to update to make the change compatible with older versions of the software.”

There has been concern that state sponsored attacks could launch a man in the middle attack during this update.

“We ask the Bitcoin community, and in particular the Chinese Bitcoin community to be extra vigilant when downloading binaries from our website.”

Bitcoin Weekly Price Forecast

This week I am bullish in the short term. I expect a retest of $603 on a leg up.

“Bitcoin spent the weekend testing $580 as support and I’m satisfied that it will hold in the short term. Buyers seem slightly hesitant though, and my stops are relatively tight.”

The elliott wave chart from the past 3 weeks is still in force.

4

My concern is on the medium term outlook, which looks bearish. Any short term price runs will be limited. I do not expect a rise above $625. Some early charts of a bearish count have surfaced and paint a grim picture of the future.

5

This is the most bearish Elliott Wave chart forecasting a retest of $100 and possibly a fall to below $100 a piece. Why?

“Because, the impulse that carved the highest historical high (across the year 2013), has been followed by what appears to be a protracted consolidation (large a-b-c across the year 2014) as a first A-Wave, followed by a B-Wave across the year 2015 into recent June 2016. a conclusive C-Wave remains afoot to the DOWN-side, even if speculative, as there is yet no other price action that exposes a clear impulse development to the UP-side for now, and no clear counter-argument to the current 3-3-3 pattern still unfolding.”

6

This A-B-C pattern described resembles the above charted I shared on a Bitcoin Price analysis 4 months ago. As ridiculous as it seemed (then) and now, it is worth paying attention to, as a possible pattern in the coming months.

7

This chart above paints a less gloomy forecast, suggesting a retest of a rising trendline at $309.

One comment

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