Wait for it…
In my previous post I advised traders to sell their coins if they had any and wait at least a week, maybe even two, into the new year to see how the market adjusts itself.
After more than a week of minimal price decline the breakout finally happened and as you would expect, it was a selling marathon. Why? Because in December 2014 the BTC/USD broke through a pretty solid support level– only magic can save us now.
When will it go back up?
Well, the market is already oversold and keep in mind that a support level, if broken, will become the new resistance almost every time. So we should definitely see Bitcoin gradually climb back all the way to at least $320, but that should be all it can do in the short term. In my last post about BTC I also mentioned that we could see the price as high as $700 this year, but we need at least 3-6 months to get there.
No Elliott in sight
In my last post about Bitcoin I was fairly convinced that we have entered the final stages of the Elliott wave theory, but looking at the charts today it’s clear that it wasn’t exactly true. The market started going sideways in the last few days of November and continued to do so for an entire week of December until on the 8th of December the bears finally gave up and bit the bulls in the ass hard. As I saw it unravel I tried to get rid of the coins I was holding, but I wasn’t fast enough and my exchanger was no idiot either… So I’m still holding them for now.
Third time’s the charm
I don’t want to sound overly pessimistic here, but there’s clearly a pattern to this. Because of the latest breakout we could very well be seeing Bitcoin test our support level around $320 for the third time. The gap between the last two would mean it’s about to happen…
The candle that closed on the 21st of November is above the one that closed on the 10th of December indicating that we’re moving further down the chart. The green bull you’re seeing at the end isn’t anything significant, it’s just showing us that the bulls are here and aware of what’s happening. Not sure if they can do anything about it at this point.
Elliott hasn’t gone anywhere… yet
Right now the 5th wave of Elliott can still be seen and I believe we will see it down the road. The question is when? The bearish candle that closed on the 10th makes a pretty good starting point, don’t you think?
Is it over already?
The last week’s rally was simply awesome. Congrats to anyone who got a chance to ride the wave along with us. The price started to gain momentum from $320 days before the actual jump took place, but the signs of it happening were all over the place. In just a few days we went from $320 to almost $460 so a correction was bound to happen. In my previous Bitcoin price prediction article I estimated the price to linger in the $410 – $420 area for a few days and then proceed to gain strength once more. Everything was fine for a few days, but looking at the charts today I can say that the correction isn’t really a correction any more, it’s a bearish ride.
FBI – The real market mover
It’s not a coincidence that the price started to fall just when the feds announced that they will be auctioning 50,000 Bitcoins they took from Dread Pirate Roberts, the founder of the biggest black market in the internet history. When you look at the chart you will see that on Monday the market was unsure where to go. I am confident that if it the feds wouldn’t have announced the auction the price would have behaved exactly the way I predicted it previously.
When you look at the way MACD is crossing you’ll see that the previous cross took place at a much lower point. This gives us a little bit of hope that the overall Bitcoin price trend is still bullish. The $320 area is still our strongest support at this point because we have tested it two times already in the past.
What about RSI?
Looking at the RSI it’s pretty clear we are going to go lower from here. Further price movement is now depending on two factors: 1) how many Bitcoins the feds are able to auction and 2) will we reach the oversold market condition before our $320 support or not.