We have just seen a 3 day break and the question is whether or not it is just the first stage of something bigger. It is hard to tell at this juncture because the at the moment the bitcoin has not even matched the size of the drop of last end of August when it dropped 1.54$, from 12.68$ top of 3 days ago it would give support around 11.14$ a bit below my initial stop of 11.95$.
If a bigger drop is indeed underway then i think it will be similar to the January-February 2012 break from 7$ to 4$ when the market lost 60% of its value, in this case a drop down to 7$ or so.

For the moment, i decided to lower my stop loss to 11.14$ and give the market few more days to see if it will rebounce from here, looking the net volume i don’t see a larger aggressive selling activity compared to the previous one of the 28 August drop (marked in the chart with the first rectangle).

This is a short term view of the last 20 days (the distance between two vertical dotted lines is one month), i added an hypothesis where this daily trend will probably meet strong time and price resistance.

After the first attempt down to 9.75$ sellers failed to take control of this market, from there a second daily uptrend started and quickly broke the 10.6$ intermediate resistance. I think that 12.65$ will provide some resistance to this trend and it should be reached around the end of this month.

I don’t have a clear idea of the long term trend because the weekly moving average is now flat,  a strong break out of my next target (12.65$) will confirm the integrity of the long term trend and it will force me again to open a long position.

To conclude, unlikely this market will drop to 7-8$ as i thought 2 weeks ago, i don’t see an aggressive selling activity for the moment, sellers probably need higher prices to show up.

 

This is a short term view of the last 30 days,the market after a strong rise to 6.80$ is moving sideways and still  fighting trying to reach the 7$ barrier. I’m noticing a drop in volatility and i need it in order to break the 7.2$ january top, at this point the BTC/USD might retest the lower channel at 6.1$ giving the opportunity to the smart speculator to open a long position for a quick bounce in prices.

I’ve talk about a maximum target of 10.2$ for mid July in the previous update, at this point is impossible to reach it with this drop of volatility, i’m more for a top at 8-8.5$ this month or next one where i’ll probably close the trade i opened at 5.06$

As you can see in the chart even the net volume is dropping confirming that bitcoin is losing steam and it is going sideways but still inside the keltner channel i drew on the chart.

If 6.1$ got broken strong support for this month is the previous accumulation price zone at around 5.2$

 

 

This is a short term view of the last 30 days,the market is still  fighting to go stay above 4.7  and to break above 5.1$. I’d like to see an increase in volume activity and the BTC/USD going above 5.3$ but at the same time the drop of volatility reduce the risk of this trade that i opened 1 month ago at 5.06$, at the moment it’s a stall in a long congested phase from 4.7$ to 5.3$

As you can see in the chart even the net volume is dropping signaling that buying in the last 3 days  is going out of steam, i think that a new drop to 4.8$ is possible before rebouncing again; in any case for who want to give a try i recommend to apply a stop loss under 4.7$ and sell at the resistance around 5.2$-5.3$. For this week the range is the same of the previous week , support at 4.7$ and resistance at 5.3$

When the volatility is so low most of the time is very difficult to have a profit following the indication of an oscillator like the one i use because the underlying noise is equal or even higher then the signal; you have to wait for an exploding volume and a rising price, two important factors that statistically may lead to further advancing prices like what we’ve seen happening last January.

Definitely a very boring period for short term speculators but i remain bullish for long term.

 

This is a short term view of the last 35 days (the distance between two vertical dotted lines is one month), i added the Keltner Channel to the price; basically Keltner channel is a technical analysis indicator showing a central moving average line plus channel lines at a distance above and below, i properly set up the parameters in SierraChart to replicate as much as possible the daily range estimates that i publish every day on my Twitter channel, range estimates that are computed with a more complex approach already explained in one of my old posts here, more infos are also availables under the technical section of this blog.

After the first attempt to break the upper channel line at 5.4$ the market is now struggling to stay around 5$. Despite this congestion phase i’m not going to close my short term trade and my stoploss is always under 3.8$ for now.

As you can see in the chart even the net volume activity is dropping signaling that volatility is very low during this consolidation phase. Usually there are three types of consolidation: a ledge, up to ten bars; a congestion, from ten to twenty bars and trading ranges, with more then twenty bars. At the moment there are seven bars of consolidation and probably within one week the price will break somewhere above or below the current up/down channel line or at least it will retest the 4.7$ support or 5.3$ resistance line.

It’s hard to say on which direction BTC/USD will break but considering the bullish underlying trend i’m tempted to say that this consolidation will resolve in an upside breakout of the upperline.

In the last update i said that i was going to buy again if the BTC/USD would have rised to 5.4$ and fall a bit; well it it happened but during the recoil phase of the cycle it dropped too much down to 4.5$, i’m not going to buy if this weakness persist, moreover the weekly moving average is still pointing down due to the recent drop to 4.5$.

I’ll remain out of the market for now, i want to see also a positive rate of change for the slower weekly moving average before buying; the overall picture is still bullish but uncertain in the short term.

This is an 8 hours chart of last 30 days since the moderate drop to 3.8$ and the subsequent ascending triangle that is developing. I marked on the chart the two moments where small cycles started, on point 1 and 2, on point 3 a new cycle  might start carrying the btc towards the static resistance, about 5$.

I think i’m going to buy again if the BTC/USD will go through 5$ during the next thrust of the cycle reaching maybe 5.4$, during the recoil phase of the cycle it will probably retrace without going down 5$, that could be the right moment to enter in the market with a long position. It’s an hypothesis, let’see if it will materialize.

At the moment, during this ascending triangle the cumulative net volume is slightly negative (~ -32000 btc) , in other words around 110,000$ have been extracted from the market  but right now the bid size of the book is stronger compared to the ask size and with enough money present to move the market to at least 5.5$ in case of a break out of 5$.

Thank you guys and see you at the next update.

I was again waiting a move to 5$ but the bitcoin reacted to 5.8$ after a situation of oversold rsi oscillator and negative net volume indicating exhaustion of the previous downswing.

In the same bar it touched 5.8$ and then a shakedown took place carrying the bitcoin to 5.3$ with considerable overall volume (~160000 btc), i’ll consider this as a reference bottom for the short term. Resistance for today and probably the upcoming weekend around 6.4$

 

I was expecting a drop to 5$ but instead the bitcoin jumped quickly to 6$, since then it slowly dropped back to 5.5$-5.7$. I still think it could develop a bottom at 5$ and then rebound quickly back to the 5.5$-6.0$ zone.

I attached here a 4 hour chart, it is visible the rsi oscillator that is in oversold territory with negative net volume. This let me think that a quick bottom might develop followed by a strong bounce probably to retest the resistance levels at 6-6.2$

In the last three weeks we have had a negative outflow of money warning us that sellers are selling good quantities of bitcoin after it has recently spiked in price from 2$ to 7$ with a great deal of  capital appreciation. Despite this selling pressure with overall high volume the prices are still well above the recent low of november at 1.94$; i interpret this behaviour as bullish for long term.

In my last update i wrote about a potential down move after the breakdown of the ascending triangle (shown in the previous update) as usually happens when such triangle is broken to the downside.
The market rebounced to the trendline  to 6.6$ as i was expecting before dropping again and there i ‘ve thought for a while about liquidating my position but i didn’t do it, my mistake.

At this point i think that BTC/USD might drop again to 5$ or even 4.5$ in the next week, in the case of a clear drop under 4.5$ i’m forced to liquidate my position opened at 3.22$ 2 months ago; why? well you should never allow an unrealised profit to turn into a loss:)

After the breakdown of the trendline of the ascending triangle one should expect a down major move, i see this drop instead as a market glitch probably imputable to bitcoinica resolving some sort of hedging issue; that drop developed in a symmetrical triangle that has been broken slightly to the upside with price bouncing back to 6$-6.2$.

At the moment the mtgox book is unbalanced to the ask side, not much bullish and it will be difficult to go above 6.7$ today where the ascending trendline is now acting as resistance.

I tought 5.5$ was support but the BTC/USD touched 4.64$ during the spike, i think it might drop again to 5.2$ before resuming the uptrend.

In all this mess the daily net volume dropped consistently but the cumulative net volume since the 1.94$ low of November is positive with +127000 btc, the long term picture is still bullish; to give you an idea during the june 2011 top the all time high of the net volume was around +740000 btc then it fall to zero at november 1.94$ low after a protracted and severe downtrend.
It is interesting to observe that since the inception of MtGox exchange the cumulative net volume has never been negative confirming the underlying long-term bullish market.

As you can see in this 3 hour chart, BTC/USD is forming an ascending triangle, usually forms during a trend as a continuation pattern (if broken to the upside). The pattern contains at least two higher lows and two highs at the same price level. When these points are connected, the lines converge as they are extended and the ascending triangle takes shape.

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.

It is possible also to project a price target in case of a break out, applying to the breakout level the widest vertical distance of the triangle, in this case 1.5$ added to 7.2$ give 8.7$ as a target.

Well, i dont think we are going to do a huge downside breakout, i stay with 5.5$ as possible downside target in case of a breakdown of the ascending trendline. Net volume activity is good, the total cumulative value of the net volume since the beginning of this pattern is +20600 btc, it means that there are more buyers then sellers up to now or, if you prefer, a positive money flow.