Bitcoin Price Analysis – Jun 3

Posted by: pesa_mic

June 3, 2015

This was bitcoin this week, since May 27. A classic candlestick hammer (highlighted) indicates lower prices have been rejected; safe to call it a bottom for now as prices are now at $ 225. The slow decline from $240, followed by an impulse drop most recently, on June 1st that broke support at $ 230 all the way down to a new 1 month low at $ 219. The black upper and lower lines are fibonacci levels drawn from $ 166 bottom on January 14, up to a peak 2 weeks later at $ 315.

Bitcoin has been trading within this range since April 10, with some overshoots on either side (encircled).. The last 2 bottoms testing 61.8% level were at $ 219 and $214; both times, prices retraced up to test 50% on more than one occasion. Readily observable on this screenshot, are doji candlesticks where the 30 day and 50 day EMA cut across the trend. At these points, it takes more of market forces to break past – on the up and down. So, on the 1 day charts, we are on a sideways trend flanked by fibonacci levels while simultaneously attempting to break past monthly and 50 day trends.

Zooming out on the 1 day, we see more clearly where this fits in in relation to the lowest bottom $166 back in February. Presently, price today is the fourth test of the $ 220 area since 315, and the third since the subsequent failure at $ 303. Since dropping from $ 315, volumes have gradually declined; in fact, over the past 5 weeks of sideways trades, visibly lower than average.

“Daily and weekly Bollinger bands are at the tightest levels they’ve been at for years. This is in addition to the volume flattening out over a long time. A breakout here is likely to set the tone for the coming weeks and months.” – Tzupy

We are drawing closer to that decision point, seen on a larger triangle convergence. The sudden move down 2 days ago pierced through lower support extended from a local bottom $ 213

Question is, can buyers show up here and bounce it back up? Or, will sellers swoop in and drag it down below $ 200?

BITCOIN FUNDAMENTALS

OKCoin alleged trading manipulation

Former OKCoin CTO, Changpeng Zhao, got dragged into a publicized disagreement between Roger Ver and OKCOin. Via a response on reddit, he disclosed incidents of manipulation, fraud, and fake audits at the exchange. Naturally, OKcoin responded by denied each of the allegations with counter responses. While there is nothing new about suspicion of dubious operations at the exchanged, the comments by Zhao are the closest thing to evidence for traders.Still, this is not proof, rather, only allegations at this point.

“. . .a full proof of reserves and audit of their security protocol is what would be best but that is going to take some time.”

Bitcoin Block size failed consensus

Meanwhile, the debate on whether or not to increase the size of a block (from the current 1MB to a proposed 20MB has split the bitcoin community. Garvin andresse, Chief scientists suggested a 20MB software change, incase the number of transactions do go up in future. Other however, disagree in favor for further tests before updating the core network. In line with this, a coordinated stress test was conducted on Monday with non-conclusive results. As of now, there are valid arguments for both sides. As a fundamental issue, this debate is worth paying attention; if consensus is reached, a hard folk may be scheduled for later this year.

WEEKLY PRICE FORECAST

This week, I am neutral to bearish. I was watching $225 to hold, but closed my position after it succumbed. Considering the analysis in the first part of this analysis, the ‘big’ move in either direction is close, but not yet. If we break below $ 200, I expect further declines. However, i am not convinced the market will revisit this level just yet. There is still a zone between $210 and $ 200 that needs to be taken out before this happens; in the past, it has been strong base from which the market has bounced off from.

I cannot rule out a bounce back up off from $ 210, but I expect the market to test this level. For that to happen, the price now will play out as a retracement of the sharp drop, possibly up till $230. This zone is a strong base for bulls to attempt another go at higher prices. Specifically, 2 price points I have consistently highlighted as necessary to overcome (marked by yellow arrows below). Over the past one month, only $240 was broken, but prices slid back down. not enough buying interest or volumes to break $250.

Any price above $ 210, despite piercing the lower long term support line, is well within the channel. So, current price levels do not convincingly rule out prices going up again. Therefore, this Elliott Wave forecast below is still valid.

Right now, I am watching the current move down to see how it behaves at targets of $ 210. Recall this chart from last week.

Updated: 2015-06-03