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destroyerYesterday’s in-depth analysis identified a Bitcoin price channel that forecasts a potential decline low near $200. This low is not a foregone conclusion but remains a potential target as long as price remains below the critical trendline that has provided long-term support and resistance since early 2012.

Weekly Bitcoin Price Channel

Here is the weekly BTC-China chart that was presented in yesterday’s longer-term analysis:

BTC-China_weekly_chart_B_21_Sept_2014BTC-China_weekly_chart_B_21_Sept_2014

The red dot indicates where price had initially bounced upwards from the critical line of support (red dotted trendline). During last week’s sell-off the trendline was breached to the downside, thereby changing our bias back to bearish expectations.

Given the historical significance of this trendline, we can only assume that the lower channel trendline, near $200, will remain a target until price action asserts a new bias. One possibility is that the Bitcoin price advances back to the red dotted trendline and that trade maintains price action above it.


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The Bitstamp chart (4-hour), this morning, shows no sign that the market has chosen a direction:

Bitstamp h4 chart 22 Sept 2014

However, two immediate factors – one technical and one esoteric – may influence the Bitcoin price’s direction in the coming hours and days:

BTC-e 15-minute Chart

The BTC-e chart’s price action over the weekend reveals a rising zone of support as shown in the chart below.

BTC-e_15min_chart_22_Sept_2014

Tracing the implied trendline to its origin has an interesting result, since the only touch-point available on the chart is a price low back in December 2012. Furthermore, using this trendline (solid orange) as the basis for constructing a parallel channel around price, yields plausible results. The resulting channel can be extrapolated to the other exchange charts and is shown here in the BTC-e weekly chart:

BTC-e_daily_chart_22_Sept_2014

We, therefore, have three trendlines that serve as triggers for expectations of price direction:

  1. The critical trendline (top chart, dotted red) that was breached last week will keep expectations bearish – as long as price remains below it. Currently, this trendline cuts through $460 straight above.
  2. As long as trade remains above the immediate solid orange trendline, expect that the market seeks to retest the critical trendline, currently near $460 overlapped by a 1.618 Fib extension.
  3. Should price action breach below the orange trendline, currently supporting price, then bearish bias will be confirmed, and the channel lower trendline will come back into focus with decline targeting $200.

Fly Me to the Moon

analyzersDepending on which definition of “technical” one uses, esoteric influences on price may or may not fall in the realm of technical analysis. Some consider lunar influences to fall in the realm of the teapot. However, the phenomenon whereby a New Moon often pulls price from a low – and rapidly so – is a recurring phenomenon. If one believes that markets are intrinsically regulated by social mood, then the influence of lunar phases appear less mystical and more psychological in nature.

There is a New Moon on Wednesday 24 September, and it may well see a rapid advance in price – making the second expectation (of a retest of $460) easily achievable.

During October there is the annual “Rutting Moon” as well as, in November, a mid-Perigee/mid-Apogee equilibrium of lunar distance from the Earth. This combination is unusual and implies a strong upward surge in the Bitcoin price. Bear in mind that “implying” and “guaranteeing” are not the same thing – we need to see what direction the market chooses before adopting a bullish stance.

Summary

Bitcoin price action is currently pulling away from last Friday’s low. While the weekly charts reveal that the decline may still target $200, there are mitigating factors exerting an upward push on price action.

The Bitcoin price may retest $460 in the coming days and require a re-evaluation of prospects for direction of trend.

Alternatively, a dip below the current support zone – a rising trendline from 2012 – currently cutting through $390 straight below, will see immediate resumption of the downtrend.

Global Events

On Saturday, 20 September, China docked (for the first time in history) a Chinese Navy Destroyer in the Southern Iranian port of Bandar-Abbas. This is at the narrowest point of the Straits of Hormuz, across the water from the “US-friendly” UAE. Now that global markets are starting to show cracks in the dam wall, the rising negative mood may also see more open conflict between hitherto posturing enemies.

As forecast in a CCN analysis update last week, the Japanese Yen shot to 109.5 Yen to the dollar at the open of the Asian market session. With the escalation in QE measures, there is no end in sight for Yen depreciation.

Ultimately, a deteriorating global economy will harm those who stand to lose most – ordinary people and the 80% of the global population who are already living on the edge of wage-slavery. From this perspective, there is no joy in documenting the train-crash-in-slow-motion. However, the effect of global financial turmoil will (besides far-reaching socio-political changes) see a bolstering of Bitcoinits use, its price and its value.

At the time of writing, ECB President Mario Draghi is speaking. Should he say anything of interest and with an implication for Bitcoin, it will be updated here and in the CCN Economic Calendar.

Economic Data and Announcements

Monday 22 Sept

13h00 UTC ECB President Draghi Speaks
14h00 UTC US Existing Home Sales – expected: 5.21M (previous: 5.15M)

[divider]CCN[/divider]

CCN hosts a summarized Economic Calendar showing the week’s main data releases.

Updates to this article will be made during the European and US trading sessions should any significant events come to light.

Ongoing discussion in the CCN Traders group. View our Bitcoin Price Chart here.

Disclaimer

The writer is fully invested in Bitcoin via BTC-e and Bitfinex. Trade and Investment is risky but not as risky as some other things out there. Take care only to take action in the market when you are 100% sure of the outcome. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this Bitcoin price analysis report.

Images from Shutterstock.

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Posted by Venzen Khaosan

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.