Bitcoin Trading: Advance or Decline


Bitcoin price has returned to its support floor for the third time in 2015. Traders must now decide what they want for this chart. The choice seems obvious – provided you understand the value of Bitcoin and its role beyond our generation.

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Bitcoin Price Analysis

Time of analysis: 13h07 UTC

Bitstamp 1-Day Chart

Bitstamp 1-Day Chart

From the analysis pages of xbt.social, earlier today:

Our long-term outlook of a zigzagging consolidation to the support floor near $220 and 1400 CNY now looks complete.

Price has advanced in 5 waves from yesterday’s low and there are several indications in the chart that price may begin advance from current levels – with one caveat that will be discussed in a minute.

All the momentum indicators have reverse diverged to previous price lows. RSI (second from the top) and the slow stochastic (dark line, top) has reverse diverged to the price low made in January 2015. Yesterday’s low only made a higher low and hence the reverse divergence should now exert an upward force on price action.

Price had retested the support near $220 and 1400 CNY in a declining ending diagonal and the subsequent advance sows 5 clear waves to the upside. We can, therefore, assume that decline has completed and that price should now begin advance.

An uncomfortable truth is revealed by the moving averages. The 20MA (green) is falling strongly toward the red 200MA in the daily chart and their cross-over is a bearish chart signal. The point of cross-over looks to occur within a day or two. This chart indication does not fit with our outlook for the start of a larger advance. Or does it?

The bearish 20MA/200MA cross-over could be mitigated if price surges strongly upwards in the coming days. This will have the effect of pulling the 20MA out of its descent. However, the cross-over is an unavoidable fact in the chart. The proposal is that price may surge higher in an A wave, then correct downwards on the cross-over – forming a B wave to a higher low – and, finally, a C wave to higher highs as the 20MA crosses back above the 200MA. The result would be an ABC – the initial wave 1 of a large advancing diagonal.

The worst case scenario is that the 20MA/200MA pulls price to a new decline low below $200 and the bitcoin market continues wallowing in negativity and short selling down there. Somehow, it seems unlikely that this outcome suits the largest players in this speculative market.

I’ve found you’ve got to look back at the old things and see them in a new light. – John Coltrane

Summary

The chart has two clear options for the path of price. The potential for additional downside exists but, equally, a multi-month consolidation between $220 and $300 means that the stage has been set for a rally to long-forgotten areas in the chart: $400 and $550. Despite an onslaught of recent negative mood the support floor has held and we now prefer upside.

Bitfinex orderbook depth and Buy/Sell Volume:

 Bitfinex depth buysell volume 11h40 230815

Click here for the CCN.LA interactive bitcoin price chart.

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Disclaimer

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.

Bitcoin price charts from TradingView.
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