This week, bitcoin price was down from a high of $ 467 in last week’s analysis. The bear drop from a peak at $ 476 over Christmas, is part of a weak reversal from $ 300 that a failed to recapture $ 500 highs. This week’s drop exhibits patterns of consolidation and sideways action, before a break out. As of writing this, price is at $ 433
On the 1 day chart, price sits above 30 day EMA, at (1). 2 weeks ago, price bounced off this level as it held strong support. A breakout is imminent here, and I am bearish, expecting the 30 day to break. It closely resembles (3), a failed double top from August. Even more interesting is how similar in form (4) and (5) are.
The 30 day Simple moving average adds emphasis to a potential drop. Since breaking above it in mid – September, trend has held above it until now. This test of support on 1 day chart will reach a decisive point soon.
Overall, the market is in a larger swing across the 200 EMA, an upper resistance line since breaking below it in 204 August. In a way, this is the first attempt at changing the long term trend. Failure to do so will lead to a similar magnitude swing in the opposite direction. A test of this line at $330 – $350 will be crucial.
Fundamental Year in Review
2015 was a great year for the price of bitcoin.
Bitcoin went up 40% in 2015 (as of 12/23/15), making it one of the largest gainers this year vs other asset classes. As one example amongst many, gold was down roughly 10% this year.
With the halving fast approaching (see Bitcoin Clock), speculation is about the impact of diminished supply on price. Already, high expectations of an induced bull run have surfaced on mainstream wire, all with good reason.
Fundamentally however, not much has changed in the protocol to make it less centralized, easy to scale and more secure. It has been the subject of blog opinions this week – Peter Wuille’s Segregated Witness, Jeff Garzick’s Bitcoin for settlement, BTCC’s Bobby Lee call for bigger block , not forgetting comment rebuttals on reddit block debate comments.The future of bitcoin is still uncertain.
2016 will be an interesting year.
Nasdaq Trades first share on Bitcoin Blockchain
The Telegraph reports a seminal moment for Nasdaq (and Bitcoin), as the firm conducted an instance of trading shares on its Linq blockchain ledger to an unnamed private investor.
Bob Greifeld, chief executive of Nasdaq said to the Telegraph
“We believe this successful transaction marks a major advance in the global financial sector and represents a seminal moment in the application of blockchain technology,”
While this announcement seems more of a first step than a nail in anyone’s coffin, it is exciting to see an actual product now versus 7 months ago when Nasdaq announced its plans to use the Bitcoin blockchain public.
Bitcoin Weekly Forecast
This week, I continue to be bearish, and expect price to continue heading low. I have targets of $ 360 – $ 390 on this move down, where I will reevaluate.
“. . . this is a rather obvious sell signal, i think the only question is how low will it go, and how long it will stay low. I’m thinking 390-360 is a buy and 400 is a sell, for now anyway…I wouldn’t be surprised to see 333$ again, my lines say 333$ is the floor of this bull trend, but i won’t hold my breath waiting to hit the floor. . .”
On the 6 hour charts, there is a bearish flag pattern, known to precede a breakout and more downside. It certainly looks bearish in the short term from this chart; we are ready for another drop right about now.
Well, we are either at the end of a bear flag formation and about to plummet, or price will continue to ping-pong between $420 and $435.
Meanwhile, extrapolating a trend line from mid – August, highlights the potential downside and where to expect a bounce (if any) on further moves down.
Longer term, the outlook is not definitive, but I continue to watch the weekly for a potential fractal play, similar to August.
“The chart below, is only intended to give you some ideas of possible outcome based on EW principles as likely patterns in this overall juncture. In deed there may be some other permutation or combination of them, I cannot reasonably envisage nor be able to show as the chart will become just jungle of lines. But hope it will illustrate both the likely complexity and the possibilities that the final low is yet in the future.”