Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Bitcoin Price At Beginning of an Extremely Important Decline

Commodities / Bitcoin Jan 13, 2015 - 04:49 PM GMT

By: Mike_McAra

Commodities

Briefly: short speculative positions, stop-loss at $257, take-profit at $153.

There’s been a plunge in the price of Bitcoin and this is reflected by an uptick in the (already relatively high) number of news stories covering the “Bitcoin crash” or how much the currency has lost since its peak values. On CoinDesk, we read:

The bitcoin price has plunged below $250 and appears to be falling further, as sell orders pile up at major exchanges.


The price opened the day at $267.08, but quickly fell after just two hours of trading. Soon after 3am (GMT), the price plunged through the $250 mark, which market watchers see as an important psychological barrier for the price.

The price held steady, but then plunged again about seven hours later, at around 10am. The price then fell about $14 to fall under the $230 mark (…).

(…)

Market-watchers have previously warned that if the price falls below $250, then further losses could be in the offing.

The increase in negative news on Bitcoin might actually be a contrarian sign that a bottom is close. The move below $250 seems to have spawned more negative stories than we’ve seen in the recent past. So, this might be read as a signal that the selling power is being drained.

On the other hand, the “Bitcoin crash” news hasn’t really made its way to mainstream media in a blatant way. Bitcoin still is not one of the major stories on financial websites and doesn’t really crop up in general news services. So, there’s been deterioration in the sentiment but it hasn’t been enough to suggest a long-term bottom, at least not yet.

For now, we focus on the charts.

On BitStamp, we didn’t really see that much action yesterday and we analyzed the situation in the following way in yesterday’s alert:

(…) following the Friday’s appreciation, the currency took a dive on Saturday, erasing most of the previous gains. If the move on Friday was on moderate volume, the selloff on Saturday was more violent. It was followed by more depreciation on Sunday with the volume lower than on Saturday but higher than on Friday. Over the weekend, Bitcoin actually went down. Overall, these developments were not really encouraging as far as the short-term outlook is concerned.

Today (this is written around 9:00 a.m. ET), there has been a weak move up and the volume has been relatively feeble. This reads more like a breather before a more significant decline than anything else at this time.

It now turns out that this has been confirmed by a strong and volatile move down. Bitcoin has taken a significant dive, losing some 13% and the volume has ballooned to over BTC40,000, the highest level since the Jan. 4 plunge (this is written around 11:00 a.m. ET). The currency hit its lowest point today (so far) at $216. This is particularly important since we actually haven’t seen such levels in more than a year. The volume is also in the range which we have seen at important points in the past. This might suggest that there are very important times just ahead of us.

If you recall, on Jan. 6, when Bitcoin was at $270 we changed our hypothetical speculative positions to short. These hypothetical positions are already profitable. The question now remains whether it’s time to close them out.

On the long-term BTC-e chart, we still don’t see the slump on the chart (it’s based on daily closes) but if it were to be included, it would suggest not only a break below the possible trend line based on the November and December local lows (the line ending around $280) but also a break below another possible declining trend line based on the November local low and the local low at the beginning of January (the line ending around $250). If you recall, yesterday we wrote:

Today, we saw depreciation to as low as $257 before the currency retraced up to over $265. The move today hasn’t been very strong just now but it might turn out being stronger than yesterday. A close below $270 could be an indication of more depreciation to come. The current situation is already bearish, but it might become even more bearish in the next couple of days, maybe even today or tomorrow.

And tomorrow it was. The slump has taken Bitcoin visibly down and it already is a sign of significant deterioration in the market, possibly a first step to $200. We have to recognize, however, that Bitcoin has actually lost much altitude in the last couple of days, from around $290 to $220 at the lowest (on BTC-e). For our readers, this has coincided with our suggested hypothetical short positions. These positions were suggested when Bitcoin was at $271.91 on BTC-e. Bitcoin is now at $234.00 which would correspond to a 13.9% gain in only 8 days on such a hypothetical position (transaction costs not included).

We still think that the gains might grow even further as we’re inclined to bet on falling Bitcoin prices. However, taking into account the magnitude of the recent depreciation, we take a precaution against a possible rebound by adjusting our stop-loss levels to $257. We also move our take-profit level to $153. In this way, we lock in some of the current gains on the hypothetical position while allowing more gains should Bitcoin in fact fall deeper. It might be the case that the action tomorrow (or even later today) will clarify the situation even further. In the current volatile environment it’s best to stay tuned to the market and we’ll keep monitoring the market.

Summing up, we think short speculative positions are still the way to go.

Trading position (short-term, our opinion): short speculative positions, stop-loss at $257, take-profit at $153.

Regards,

Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts at SunshineProfits.com

Disclaimer

All essays, research and information found above represent analyses and opinions of Mike McAra and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mike McAra and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. McAra is not a Registered Securities Advisor. By reading Mike McAra’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Mike McAra, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules