I am very sad for all long term investors to report “No change” since my last weekly long term update, my weekly moving average has remained unchanged in its down movement and I am as pessimistic as ever that it will reverse soon.

Under the pressure of that moving average we are constantly falling and any attempt to rebounce failed to break above the average. I think that it will be difficult to avoid a breakdown of the 5.74$ august bottom, it will probably happen within the end of september or early october.

How long will the price fall last?
Well, i can’t say with certainty but i can compute an estimate of this weekly downswing assuming that it will last up to 25 weeks and average volatility, in this case i’ve as a target something around 3-4$, assuming instead a strong value of volatility i’ve ~2$ as possible target.

The situation is very clear using a longer time frame like the weekly one.
Since the June top at 32$ every weekly bar have had a lower high, the bounce from the recent 5.74$ low has completed and now we are resuming the downtrend. A first important step for a weekly reversal to the upside will be to do not break the recent low with an higher low maybe around 6.50$, from there it is necessary to break above the 12$ resistance; without all of this it is impossible to avoid a new low under 5.74$

The inverse RSI fisher transform is oversold for 5 weeks now (it has never happened before) confirming the downtrend .  For all the long term investors i hope that the slide will stabilize over 5.5$-6$ during september but the BTC/USD needs a new wave of fresh investors otherwise this downtrend will never stop (eventually it will slow down) due to miners that needs to sell bitcoins to pay back mining costs.

After a long sequence of lower weekly highs, since the 32$ top, the BTC/USD has made a strong breakdown below my 9$ long term static support, the subsequence bounce to 11$ it is normal and the overall outlook remains bearish.

I calculated an hypothetical maximum extension of this weekly downswing from 32$ and it is around 6.50$, this target is in line with the secondary target of the elliott wave software i use (using the cycle and primary time frame, both suitable for long term investors), i dont think we are going to see lower prices then that for the next weeks.

Cycle, Primary, Intermediate and Minor wave degrees are all pointing down, it is still a sell or stay out of the market advice and nothing’s changed much since my first elliott wave outlook . The recent drop under 13$ is a confirmation of this bearish situation.

As i said, now four consecutive wave degrees show a clear NEGATIVE trend, the conservative target of 11.50$ has not yet been reached but as more and more wave degrees shown a negative trend the probability of a meltdown increases considerably, even down to the secondary target at about 10$.
For the Elliott Wave theory, this is a very long term signal since it starts with the Cycle wave degree followed by the Primary and Intermediate wave degrees. The typical wave degree for the medium-long term investor is the intermediate one, which is currently pushing the price down to 11.50$. 

I’ll be a buyer when all this bearishness will evaporate after an important bottom probably under 11$ and with a confirmation from the moving average i use and the oscillator (still oversold).

Despite the fact that btc/usd has broken my long term downtrend line the overall picture remains weak. We could have seen the first shy attempt of a major trend reversal but it’s not enough, for who has experience of elliott wave analisys we have all the major waves inherent to a long term investment horizon pointing down (primary, intermediate and minor wave degrees).  The indications i’m giving in this update apply to longer term investors for a price moves of possibly 30% or more, since Primary, Intermediate and Minor Wave degrees are all DOWN. The most certain price target is the target of the Minor wave degree, which is in wave 3, at 14.2$, normally also the target of the next higher wave degree could be reached at 13.6$, which is in wave 2.

Instead, looking for a possible target for the Primary time frame , we are in a wave 3 and the first target is at 11.80$.

It’s a good sign that all these targets are above the long term static support placed at 9$.

The BTC/USD bounced nicely from recent low at 11$, it is breaking the long discending trendline i’ve drawn. Personally i wouldn’t open a long term trade only on a temporary break out of a descending trendline; despite the good volume seen during the current bounce i’ll prefer to wait before abandoning my first scenario of an important test of the 9$ long term support;  in any case if i see strength above 16.75$ i’ll evaluate a buy on a break out of a strong level i compute as usual.

The USD/BTC  is falling, following a descending trendline that is connecting all the way down the last two weeks sequence of lower highs. So far the 13$ level is providing support but i dont think it will hold the price for too long, as long term support i like the 9$ level that was an important previous resistance now of course support.

That descending trendline will meet the 9$ level around next 20 July, so at that date or before the usd/btc is going to test this fundamental level. I think that only a major shock will allow the development of an important low where to begin again a new season of rising prices and it will not touch the 9$ support for then simply bouncing from it, i expect a rise in volatility and strong volume around it that might allow to buy during a strong and fast dip under 9$. Usually a buying opportunities in a bull market generally arise when the market drops below its 50 day moving average (13$) but remains above its 200 day moving average (4$ ). I think just such an opportunity might lies ahead with this upcoming test of the 9$ level.

As you can see in this daily chart, BTC/USD is forming a symmetrical triangle, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and thesymmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time.

While there are instances when symmetrical triangles mark important trend reversals, they more often mark a continuation of the current trend. Regardless of the nature of the pattern, continuation or reversal, the direction of the next major move can only be determined after a valid breakout of the two trendlines.

Roughly 75% of symmetrical triangles are continuation patterns and the rest mark reversals. The reversal patterns can be especially difficult to analyze and often have false breakouts.

It is possible also to project a price target in case of a break out, there are two methods to estimate the extent of the move; first  the widest distance of the symmetrical triangle can be measured and applied to the breakout point, in this case we have a target of 17$ (closing point of the triangle) plus 8/10$ equal to 25$.
Second, a trend line can be drawn parallel to the pattern’s trend line that slopes (up or down) in the direction of the break. The extension of this line will mark a potential breakout target of 27$ for an upside breakout.

Well, i dont think we are going to do a huge downside breakout, at current difficult level of more then 1.3 million the electricity needed to produce one bitcoin is at least 3$ and even 7$ for people living in europe with higher electricity costs, unlikely that they are going to sell their bitcoins for less then the cost to produce them. In a worst case scenario, without a drop in difficulty, we might see a slow weekly correction down to 8-10$.

Here’s the weekly chart, the alma moving average is slowing down but it does not have reversed its direction.

While we are waiting the MtGox exchange to reopen, i’d like to move your attention to what is happening at TradeHill Exchange. The last 3 days have been slightly bullish with price advancing from 12$ to 15.50-16$ with an increased volume activity. The ALMA moving average reversed to the upside but i dont expect a strong upswing with MtGox still halted for updating its systems for strengthening security.

Last official update from Mt.Gox Support Desk says:

We will relaunch the site on June 25 at 3:00 GMT. Trading will resume at 4:00 GMT (same day).

 

In the last week end we have seen an extremely volatile market that makes me uncomfortable to post my short term trades on a public blog like this followed for the most part by amateurs. With the yo-yo behaviour of the last week end, it is easy for an amateur speculator to get slammed trying to follow the trend. In this situation a better approach is to try to figure out whether current prices are high or low relative to a normal price range. If you can do this you can begin to trade any market with confidence.

I do that, as i explained in one of my earlier posts, computing support and resistance with an estimation of current volatily and the time considered for the forecast (usually from 15 to 25 bars of the time frame used). So if the market goes under your calculated support and then you have a buy signal you may try to “take a stand” or basically telling everyone that you think the market is under priced and telling to other market partecipants that they might have made a mistake by pushing the market too low. So I say you should learn how to take a stand at support or resistance levels also through personal experience.

On a weekly basis, the trend is still up, trading activity is growing and show an increasing volume activity. The weekly moving average is unaffected by the recent wild daily swings, the inverse fisher rsi is still overbought with no signs of weakness.

In the last two days the market impressed me; an incredible acceleration from 10$ to 17$ with good volume. Many has asked me to make a forecast about a potential important target, well isn’t an easy task but i’ve decided to do it, so i calculated a potential mid term target using weekly data. Usually a swing, in any time frame (hourly, daily, weekly, monthly) may last up to 25-30 bars with a minimum of at least 4 bars. This weekly swing started from 0.56$ in april and so far this market has risen over the last 9 weeks.
Hypothesizing that this weekly swing will last for 25 weeks, a maximum target would be around ~70$ in october. I’m pretty sure that approaching such an impressive target many big bitcoins holders will be tempted to sell their stake stopping the ride. Can this market go beyond 25 weeks? Yes, but more likley with a weekly correction of at least 3-4 weeks.

Otherwise if the top is now and a weekly correction will start immediately with a minimum duration of 4 weeks, the area around 10$ may provide support attracting long term buyers.

If someone is interested to a further deep explanation on how i derived these targets, let me know it leaving a comment here. Thank you.

The old 8.90$ top has been broken these days without much resistance and i interpret this as a bullish indication.
The bitcoin should reach 11$ before mid June at this pace.

Support around 8$, at this stage of the trade, the worst that can happen it’s to stop loss at even, above 7.50. I’m going to don’t touch anything if we will remain above 8$ the next days.