This week on Bitcoin markets & Price Analysis – 13th May

Posted by: pesa_mic

May 13, 2015

Price this week maintained its upward trend after briefly dropping to $227 on Thursday, overshooting $232 support by 5 dollars. Such is the choppiness of bitcoin prices and in this case, any stop losses at support ($232) with no allowance were triggered. This short-lived low served as support for a couple of upward trajectory impulsive moves to $249. $250 is now an immediate a resistance; looking at 3day charts, we can see why – 30 day EMA line cuts exactly at the this level, and this attempt failed to pierce through it.

On a lower time frame, prices are in the process of retracing down, looking to find support at either an EMA or lower channel support before another go at $250. This channel is holding steady now on most time frames. A triangle pattern can be observed forming – flat base and a declining top. On closer look, volumes have been thin, low and declining since the bottom at $166. Hardly what one would expect of a convincing move up.

“It appears we are slowly moving up, but without a violent rise on large volume, and no immediate fall” – Tony Vays

On 12H charts, 30D, 50D and now 100D EMAs have been broken, with only 200D left to take out. 100 D sits squarely at $240 – expect it to act as support for another leg up. In addition, 23.6% fibonacci level, drawn from lowest low ($213) to highest peak ($249), converges at this point as well, reinforcing it as a strong support.

According to my analysis, we are in a correction of a larger move from $303 down to $213. More on this in my weekly price forecast.

Bitcoin Fundamentals

Nasdaq Set to test Bitcoin Blockchain Technology Use Later this year

Via a press release, Nasdaq stock exchange announced it will experiment with Open Assets Protocol – a blockchain-enabled digital ledger technology built on top of Bitcoin – for its Nasdaq Private market data records. The application, will run as from later this year, concurrently with its current system.

“Utilizing the blockchain is a natural digital evolution for managing physical securities,” said Bob Greifeld, CEO, Nasdaq

Bitcoin Exchange itBit gets NYFS License and Charter partner

In a press release, itBit bitcoin exchange became first to obtain a banking law charter from New York State Department of Financial Services (NYDFS) via its partner itBit Trust Co. Technically, this allows it to operate across all 50 US states and bypass any need for a state by state transmitter license – as has been necessary till now. It will now open its doors to retail and institutional bitcoin traders, particularly US customers. Shortly following this news, a $25 million series A funding round announcement was made via a press release.

Bitcoin Side note Trading tips

Using stop losses (SL) when trading bitcoin is one strategy to preserve trading capital. Bitcoin price movements are choppy, thus SL at obvious price levels are likely to be executed by wild volatility due to shallow order depths. A reasonable allowance for price overshoots should be factored into SL. Additionally, trailing stop losses, can help you break even or secure profits from additional price increases.

Bitcoin weekly price forecast

My forecast from last week’s analysis remains unchanged. Short term outlook is still bullish, albeit not for long, as price will likely continue up to test break $ 250, $255 and possibly up to $270. Looking at range bound channel, 2 yellow arrows point to the targets up. The channel line support and upper resistance lines are still active.

On lower timeframes, price has stabilized, finding support at every higher level – $232 and now $240. EMAs are crucial in this – looking at 12H for instance, 30D and 50D acted as support mid last week, culminating in a break above 100D. Now, this is seemingly holding well, any test on it may pierce through, similar to previous attempts (encircled).

I expect another go at breaking $250, followed by a run up towards 200 EMA line at around $255. After that, $267-$270 is the next level of resistance. Multiple charts, trend lines, support/resistance lines, moving averages and channel bound price action point to these levels.

That said however, my outlook for mid term price targets is still bearish – like I have persistently called for. Price movements either up or down never occur in straight lines. After impulse/slow grinding moves, market exhaustion sets in leading to retracements. Now, in EW, they are termed corrective waves, which is what we’re in right now – a complex one for that matter. They come in different forms.

Looking at the long move from $303 to $213, you can see how the recent price move up is really a retracement. This pattern manifests itself on smaller & larger time frames ie fractals. With this in mind, I recommend caution while we trade this trend up. What i am looking for is a top, where I expect a reversal to kick in and take us back to test $200.

Here is a chart showing long term perspective and the lower prices I expect to see after the current move up loses steam.

 

Updated: 2015-05-13