The morning’s correction
At around 10:30 AM the BTC/USD pair started to sell quite rapidly from 246.440 USD per Bitcoin, correcting the previous days bullish movement. It was of course expected because the market had reached the overbought condition almost at the same time.
The support level of 238.416 USD per Bitcoin seems to be holding nicely right now, but there is still some room to move a little lower. The trading volume has started to decline already indicating that a lot of the traders are already closing their SHORT positions, perhaps getting ready to go LONG once again.
Targets to aim for
If the support level of 238.416 holds then we can expect the price to move upwards to at least around the 241 USD per Bitcoin area. I wouldn’t bet on the 247.440 resistance just yet because the Bollinger Bands indicator is showing a slight downward direction at this time.
Thanks for reading and please use the Pivot Point Calculator I made to get your support and resistance levels easily!
As you can see I have finally updated to a better, more sophisticated software. The price chart looks a lot better now with a lot of custom features and I already looked into MQL4 programming language which at first glance seemed epic easy to master so keep an eye out because in the future I could create a trading robot for Bitcoin ;)
Other half of January
It’s not looking good for the bulls- at all. The breakout since the early days of year 2015 has been harsh for the bulls. Bitcoin has now fallen from $317,3 all the way to $226 and it’s showing no signs of stopping any time soon. Remember, we are dealing with the lowest point of BTC since March 2013. The fact that we couldn’t break the barrier of Jan the 3rd which was $289, on the 7th of Jan (which is the highest point for price correction) means that we have a confirmed downward trend. Just look at that last black candle of death…
So what should we do?
I’m a bull myself and I never make good trades from selling, but if you want to give it a try then wait for another price correction up to some $264 area and then go short. It makes more sense to sell at this time. I personally haven’t YET given up all hope and I will be waiting for an opportunity to go long instead. It might not happen any time soon, but we have been lingering in the oversold area for too long already.
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.
Bitcoin in the year 2014
We started out strong this year! After the traditional years end selling marathon where the BTC fell from its highest point yet, the $1200 area, we quickly recovered in January 2014 from $600 all the way up to $1000 again. Investors were confident that Bitcoin is the new goldmine.
The media coverage
It’s no surprise that the media was creating a fuss about Bitcoin considering that BTC is a commodity that suddenly exploded from $100 to $1200 in just a few weeks. Everybody was talking about Bitcoin in 2014. People were creating new businesses that solely relied on Bitcoin as a currency and even the government, the banks and the IRS were taking Bitcoin seriously. All this controversial publicity reflects nicely on the charts as well- it’s almost as if BTC became alive! Heck, even PayPal added limited support for Bitcoin.
What goes up, must come down
Surely something that suddenly rises to such heights must come down eventually and chill for a while to balance things out. This is exactly what happened throughout the year 2014, the BTC/USD gradually came down from the high losing the hard on it had from all the media fuss.
What to expect from 2015
If you look at the yearly chart (above) you can see that we are currently at the lowest point yet ever since this whole madness started back in 2013. Because we are getting closer and closer to years end a lot of investors are raking in profits for a fresh start next year so the mass selling of BTC right now seems pretty normal to me. I am kind of disappointed to see that we broke through a nice solid support level in the $320 area though. Looking at this makes me believe that the maximum buying potential for BTC in 2015 shouldn’t get us higher than $600, maybe $750. It will need some serious super powers to get past that point.
Right now we are probably going lower from here as the years end is creeping closer and closer so don’t get too crazy when you wake up one morning and find that BTC is worth only $250. The $320 area support level was a serious breaking point and there’s nothing left to stop the selling any more other than the deliciously low price itself which will surely get investors back to buying, especially in the first month of 2015.
Tips for 2015
- Sell all your Bitcoins until the new years eve.
- Wait for a week or so.
- Start buying up coins and enjoy the rally.
- Look out for any media coverage (good and bad).
- Keep an eye on this blog ;)
Elliott 5th wave
This screenshot shows a trend line that I drew from the lowest point moving upwards. So far so good! The last two bullish candles indicate the 5th wave in the Elliott Wave sequence and according to that logic we can expect the price to move higher than the highest bullish candle that you can also see on the screenshot. This could mean that in the near future we might reach the $450+ area. Other aspects of my technical analysis are also showing a green light. Let’s take a look!
MACD seems to be crossing
While it’s a little bit too early to say for sure whether MACD will cross in a few days or not, the chances of that happening are quite high. We are seeing it making lower lows and the lines are getting closer and closer together. Should they cross it would mean a confirmation in the overall up trend for Bitcoin!
What RSI is telling us?
I am a little bit disappointed that the RSI didn’t move lower. It would have meant a much more intense rally in the future. It seems that we are currently drifting in a neutral area where, once again, upward movement is far more likely to happen.
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.
I underestimated the market
Guess I have underestimated the buyers potential and also the significance of the recent hidden service raid that FBI conducted earlier this week. Just look at that wonderful green bullish candle :) There’s clearly a connection between the raid and the price movement here because last time FBI closed one of the biggest darknet marketplaces and confiscated millions of dollars in Bitcoins the price skyrocketed exactly the same way just a few days later. After they put those coins out for auction the price obviously fell and now we can see the same thing happening all over again. Will they auction these coins as well? Time will tell.
The RSI indicator is showing that the price has moved over the overbought line. This along with the fact that we’ve had a crazy rally means that a price correction is imminent. How far will it fall? There is a very strong support level around the $380 mark, but I highly doubt it’s going to fall that low. A more reasonable target would be the $410-$420 area, where the price may linger for a few days before we have a better chance at entering a long position again. That being said, there’s no reason why you should close your position right now if you’re aiming for something bigger!