This is the first update for BTCchina exchange on my blog and i dedicate it to the growing Chinese community of investors that led the recent rally from 700 to 1300 CNY.
While profit taking in recent days has held up perfectly the VWAP support level the price drop has been an excellent buying opportunity. I believe that if prices remain above the VWAP we could see a further rise towards the second line of statistical deviation of the VWAP which is currently positioned at about 1650 CNY.

In the event that the VWAP level is broken to the downside, i believe that we will find a strong reaction from buyers around the level of 700 CNY that should hold up without problems and it would be an amazing buying opportunity for the medium term.

What we have just seen is nothing more than a profit-taking in a strong uptrend. As always, our reference is the VWAP line and for bistamp at the moment it passes at $ 147, say $ 150. I’m not worried as long as prices remain above this level, it is just volatility because of some investors cashing in profits by selling large quantities of bitcoins.

For those who want to buy it is always good to try close to the VWAP, particularly if it is trending higher like it is doing this month. For MtGox this month VWAP is at 160$, for btc-china it is at 1000 CNY.

This is the same analysis of the previous udpate but adapted to Bitstamp exchange, why? Well i’m getting more and more worried for the sort of MtGox exchange, the book of orders is drying out with less of 35k total bitcoins offered on the ask side. Investors are looking for other exchanges where to sell their bitcoins without any worries if they decide to withdraw their money. So from now on i’m going to publish market updates also for bitstamp exchange.

My MtGox mid and long term target of 167$ and 200$ correspond to 152$ and 185$ for bitstamp, levels that might be touched this or next month. VWAP at bistamp is at 122$, an interesting level where to buy in case of a retracement.

DISCLOSURE: I’ve already moved out my accumulated profits from MtGox, converting them in bitcoins, i’ll wait to sell them at the same price in usd when possible.

 

After the initial price shakeout down to 109.70$ sellers failed to take control of this market, from there a strong daily uptrend started and quickly broke the 131$ intermediate resistance, a level that I thought it was hard to pass in case of a mere technical rebound after a strong bearish bar; instead BTC/USD reached the 153$ today above the 148.9$ top of September that it’s now a  broken resistance.

At this point i think that 167$ will in any case provide some resistance to this trend and it should be finally reached before the end of this month.

Volume activity is increasing thanks also to china gaining momentum since 2 weeks, a nice surprise and in the event of chinese big players trying to get on the train the momentum could increase to really high levels and probably my target of $ 167 might be a little conservative.

Long term VWAP third deviation line it is currently at 200$, a more probable target in case of strong momentum.

In last post i was thinking about a shakeout rather than a true breakout towards lower prices, well i think that we have just seen a strong shakeout after a bearish news for bitcoin (actually i consider it a positive news, i don’t like to see bitcoin associated to criminal activities of any sort). The volume average i’m plotting since the last major bottom of July worked out perfectly, the strong rebound from 109$ ended right now and it’s possible that a secondary reaction develops with a drop down to 125$ or so (testing again a static level i consider relevant).
Outlook for October is flat but any strength above 145$-150$ should carry bitcoin to my mid-term target of 165$-170$.

A quick flash crash and BTC/USD is again at around my static support,i think that this drop is temporary and i bet that the VWAP will provide support at 107$ for the coming days. I’m not going to close my half position (50 btc bought at 140$) before a price stabilisation that will occur probably somewhere between here and 105$.
If 105$ will not hold then there are the 2 deviation lines indicated in the chart, 85$ and 62$ where strong buyers will probably show up.

UPDATE October, 3
BTC/USD bottomed out at 109.7$ very close to the VWAP that provided support as i was expecting yesterday, the question now is whether this is a high volume breakout that portends much lower prices, or a high volume shakeout that will quickly be reversed. So far BTC/USD reacted from VWAP back to the first deviation line at 131$ and it is important now to don’t start to drift lower and lower in what i’ll call a secondary reaction that might end at 90$.

Since the market is still above an important moving average i’m plotting since july bottom at 65$ and trending higher since then, I am leaning towards the shakeout theory rather than toward the breakout theory. If I am right we shall see a rally back above the 131$ level during the next couple of days. Should we finish today or tomorrow above 140$ I think a substantial rally will have started.