Bitcoin Price Technical Analysis for 10/8/2015 – An Expected Decline

In the previous Bitcoin price technical analysis Go Short Now!, it was explicitly stated that the current action in Bitcoin would lead to a big decline in Bitcoin and that short positions should be created. As can be seen, Bitcoin did crash down to $260, slightly above my target of $257 over the weekend.

Bitcoin is currently trading down 4.34 percent at $265.06.

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Bitcoin price chart

Image: https://www.tradingview.com/x/d4WybCv5/

But, the big question now is: What to do? Should we stay short or should we book profits?

As the technical indicators approach oversold levels, it’s best to practice a bit of caution. Read on below the latest technical indications for further clarity.

Bitcoin Chart Structure – Earlier trading in a descending triangle, Bitcoin finally breached the support and kissed $260. A closer look at the daily BTC-USD price chart above suggests that the next strong support is near $255-257.

Fibonacci Retracements – As the bearish pressure increased, Bitcoin pierced through the 50% Fibonacci retracement level of $268.50, and is sustaining below it. The 61.8% Fibonacci retracement of $256.82 is expected to be a strong cushion in the near term for Bitcoin.

Moving Average Convergence Divergence – The MACD has dived into the negative zone, Histogram has sunk even lower and Signal Line has witnessed a sharp depreciation over the weekend. MACD now reads -1.8897, Signal Line reads 1.8500, and Histogram has a value of -3.7397.

Momentum – The Momentum now reads -19.2700, while its previous reading was -16.9100.

Money Flow Index – The MFI has simply crashed from 49.1053 to 22.2503. Values below 20 suggest highly oversold conditions.

Relative Strength Index – The strength reading has taken a hit as well; the 14-day RSI is 38.9959.

Conclusion

It is best to cover a major percentage of the short positions now or when it retests $260 as the risk-reward ratio is 1:1 (roughly). Wait for a good bounce to build short positions or long positions when the price nears $255.

Source

TheBitcoinNews.com – leading Bitcoin News source since 2012