Bitcoin Price Analysis 22nd October

Posted by: pesa_mic

October 22, 2015

This week bitcoin went up 10%, trending up from $250 to a week high of $ 275. The market exhibited intent this week, moving up strongly on the back of equally convincing volumes.

Looking at this chart from last week’s analysis, the market had to overcome resistance at $250 (4) before moving up higher towards 100 EMA target at $276 (5). Moving average lines are great for targeting resistance and support levels. You can quickly tell how strong a level is by attempts made to break it. Like (1), (2) and (3).

As I write this, price sits right below 100 day EMA line at (5) $268, where resistance is pushing back on it into a consolidation. Price halting at this level is no coincidence. There are multiple indicators why price is consolidating here before a decision on whether more upside will follow.

(3) at around $271 was a significant support level in August, coupled with tight converging 50 and 30 day EMA lines; after breaking down, price fell sharply to $182. This level now turns into resistance on the current move up at (5), reinforcing this level.

The weekly chart, shows where price sits currently; it just broke above 200 EMA from below and vastly resembles the past year of oscillation around this moving average line. Unlike similar moves in February and August, this time there is a cloud of EMAs right above price. Bitcoin price will have to break all these EMA lines for a convincing trend reversal or similar to the past year of price action.

I am skeptical of a break above $300, as this pattern closely matches last year October, when price similarly oscillated around 100 EMA, but lacked enough intent to reverse the bear trend. In hindsight, it was a correction of the bear trend, and price resumed the trend right after.

I will admit, speculation and sentiment on trading forums are in favour of a bull run to $360.

BITCOIN FUNDAMENTALS

Australian Government to regulate bitcoin gradually

According to Coinfox, the Aussie government will heed caution in its approach to regulate emerging payment systems such as bitcoin, so as not to stifle innovation. These comments came after a government report titled “Improving Australia’s Financial System”.

More interesting is the fact that the Prime Minister of Australia, Malcolm Turnball, made a bid for $ 2000 worth of shares in a bitcoin mining company for its upcoming IPO. Considering this public display of warming up to bitcoin, I trust the Australian government is serious about embracing bitcoin and digital currencies.

1 Bitcoin worth $ 1 million, says Xapo’s Wences

Speaking on a Bitcoin panel at an event organized by Techcrunch, CEO of Xapo commented on the possible price of bitcoin in the coming years “I think that there is a higher than 50 percent chance that a bitcoin is worth more than a million dollars.”

Wences also spoke on the potential downsides, emphasizing that bitcoin was a “super risky investment that has incredible asymmetry.”

According to him, everyone should own some bitcoin, at least 1% of their savings. If you are reading this, you should too! I say at least 5% of your portfolio size.

More of this story by Kyle Torpey on coingecko

Bitcoin less Volatile than Traditional Asset Classes

This week, Dan Morehead, CEO of Pantera Capital, tweeted 3 charts comparing the volatility of Bitcoin over the past 1 year, versus other more traditional assets. Bitcoin volatility has hit an all time low, not so much for stocks, commodities and paper money.

BITCOIN WEEKLY PRICE FORECAST

This week I am bearish, as I expect price to consolidate at the current levels. After the last weeks of pushing up, resistance at $275 will hold forcing price consolidates. It could go as low as $ 250, to find support for another leg up.

I believe wave (iv) is “in”. I can count five waves down. At 283.38 level is where c=a*1.618. It is rare for C waves to be longer than a*1.618. It’s possible to project wave (v) by using a channel connecting waves (ii) to (iv) and through the end of (iii).

This year has been interesting to watch, as $200 support has formed a base for a repeating pattern. Soon or later, a decision will have to be made on whether the bear trend continues or a trend reversal marking $152 as the final bottom.

Updated: 2015-10-22