Bitcoin price edged lower today into strong buying support. Despite being technically in decline, the current move may not continue pulling lower. In a telling misfire, the Bank of England disappointed markets today when it, too, displayed can-kicking behavior that sent the pound tumbling.
Bitcoin Price Analysis
Bitstamp 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
Clear targets are not forthcoming for this wave to the downside – it appears to be a B wave prior to an advancing C wave, and such B waves hardly hit target squarely. Fib extensions, magnetic lines and tea leaves all give different levels.
RSI (second from top) is reverse diverged to everything in this chart but price does not confirm a new low. The xbt.social stochastics, at top, are bubbling blue with divergence and the MACD indicator (bottom) is in the same diverged condition.
A reversal should occur soon – perhaps at the Fib line – but this is no time to assume anything. Another marginal low may be due (its possible to only count 3 waves of a 5-wave diagonal to the downside). If support near $277 holds the eventual move should be to the upside, but, as per previous analysis, it may fall short of $300.
A breach of support, to the downside, will draw Bitcoin price into a larger decline and then the mid-$200s should be the next stop.
Central Bank Tragi-Comedy
The release of a central bank’s Monetary Policy Committee meeting minutes gives analysts an insight into the voting and stances of committee members in relation to future policy direction. The hot central bank topic at this end of the downturn is rates hikes.
The Bank of England raised expectations by posturing to play a strong hand in the currency wars today. For the first time, it simultaneously released its interest rates decision, the minutes of its Monetary Policy Committee, and its August Inflation Report.
This triple whammy of significant central bank data saw volatility in the British pound (GBP) forex pairs. Most banks expected the pound to rally into the start of an interest rates hike cycle and recommend a long GBP position.
Goldman Sachs argued that domestic inflation pressures in the UK economy are sufficient to counteract pound strength and that the BoE can afford a stronger currency at this time.
In May 2015 UK Inflation was 0.0%. Like most developed nation central banks, the BoE is targeting 2% inflation which they hope to achieve within two years. The committee kept interest rates at 0.5% (as expected) but the market anticipated a hawkish rates agenda.
The Bank of England surprised by lowering inflation expectations and being non-committal about the timing of a rates hike. The pound dropped broadly on the news.
In his statement, a stoic BoE Governor Carney said:
The near-term outlook for inflation is muted and the falls in energy prices over the past few months will continue to bear down on inflation at least until the middle of next year. Nonetheless, a range of measures suggest that medium-term inflation expectations remain well anchored.
Translated from central bank speak the above statement reads: despite applying unprecedented monetary inflation the BoE can’t achieve price inflation – the oil price and commodities crashing through the floor doesn’t help; we’ll have to delay rates hikes until next year sometime; and, we end the statement with a vague “range of measures” and a symbolic “well anchored” to imply we’ve got the economy under control. [applause]
To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate. – Jesse Livermore
Bitcoin price has declined to support near $276. Looking at the chart price seems precariously close to the edge of a cliff, but buyer keep filling in below price and the orderbooks seem to indicate bullish bias. If the support holds we may soon see a move back toward $300, although the outlook is that it may not quite get there (again).
Bitfinex orderbook depth and Buy/Sell Volume:
What do readers think? Please comment below.
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The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.