Bitcoin Price Analysis September 2nd

Posted by: pesa_mic

September 2, 2015

This was price action this week – an uninspiring sideways trend with a bit of bullish intent that failed at $239. The rest of it was Meh. Since turning from bottom at $196.6, volume is visibly thin after a V-channel retracement going up till $230. The dragon-fly doji pattern at $296 vindicates the move that followed, but looks suspect after this week’s dreary sideways action. After peaking at $239, market seems to be at a major decision point and is stuck in limbo; whether to break up or down. A big move looks certain, question is where?

On the 4h charts, price is attempting to change trend, but, for that to happen, it has to break moving average lines – great indicators for observing change in short, mid and long term trend. Here, $239 was a resistance by 100 day EMA line pushing back on momentum to break. It fell to find support at 30 day EMA, but failed to convincingly break above both 50d and 30d. The 2nd attempt today, also looks to have failed and price has broken below both average lines. It speaks to the strength of the market, more is required to break above, like, a sudden increase in buy volumes.

Simple moving averages on 12h confirm a crucial decision point coming up this week. THe 30 day SMA (blue) is supporting the price currently. It resisted a break up at $ 239 and has now turned into temporary support. Right under, there is double support at $225 (give or take). Depending on how strong this is, I wouldn’t be surprised if this moved up to $ 245.

BITCOIN FUNDAMENTALS

Barclays UK to start accepting Bitcoin

This week, Barclays announced it will begin taking baby steps towards accepting bitcoin, from the lowest hanging fruit, Charities. The Sunday Times reported the financial services firm, will partner with an unnamed bitcoin exchange to allow charities accept digital currency as an alternative payment method. An official spokesperson, Chief design and digital officer Derek White revealed few details, speaking to the Times

“Barclays is enabling the bitcoin exchange to help charities accept bitcoin.”

It is likely the exchange is Safello, a fintech startup from Barclay’s accelerator lab in London. Both partnered through the program to explore bitcoin and blockchain tech. On the surface, this move looks like

“it’s meant to be a politically neutral move which lets them start to test out Bitcoin without inviting criticism”

Commonwealth Virtual Currencies Work Group Recommends Regulation

Coindesk reported a commonwealth workgroup on digital currencies was held in a 3 day conference this week in London. The commonwealth, is an association of 53 states – sovereign and independent – most of whom are ex-British colonies. The group came up with a list of recommendations after hearing from the banking sector, academia, users, bitcoin startups, law enforcement authorities and the UK Digital Currency Association.

“Member states should consider the applicability of their existing legal frameworks to virtual currencies and where appropriate they should consider adapting them or enacting new legislation to regulate virtual currencies.”

A notable list of representatives from the IMF, World Bank and Commonwealth Telecommunications Organisations were in attendance for the workshop group. Conclusions from this event can be found on scribd.

Sidenote: Tim Draper spoke to Bitcoin Magazine saying

“When bitcoin is mature, I expect people to run to bitcoin the way they do to gold when the market gets scary”

Traditionally, during financial market turmoil, investors flee towards assets that are perceived to be safer – gold, silver, cash and treasury bills. I expect Bitcoin to increasingly become an option as a safe asset. Despite its short term challenges – stable value, volatility swings and mainstream recognition, it has all the qualities of a safe haven asset. All it needs now, is a crisis to propel it into the limelight. The threat of capital controls, negative interest rates, loose monetary policy and a direct effort to obsolete cash by Central banks, makes a strong case for the role of Bitcoin. Tuur Demeester speaks concisely on this in this video – Why You should invest in Bitcoin

BITCOIN PRICE FORECAST

This week I am neutral to bullish. I expect this to be a key decision point, and a sideways trend might persist a while longer, testing low range supports up to $220, to shake off weak hands. Therefore, $213 is as far as I will consider a bullish move still play – a stop loss. Breaking below $ 213 and this forecast is invalidated. The upside target for a successful move up is $255 (Target 2). A break up from this tight range will be a buy signal for many, resulting in a thrust up.

The overall bearish expectations still loom, as per this chart from whaleclub.co with market currently trading in the red rectangle zone. Thus, while higher prices in the short term are probable, the larger price pattern is tending to testing sub $ 200 prices. I will discuss this real possibility in a dedicated post later this week.

Updated: 2015-09-02