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japan bitcoin priceThe Asian morning session has pulled the Bitcoin price below the weekly pivot level at $476. The question is what the European and US trading sessions will do with today’s chart. If the market wants to take a stab at the $412 target, then today presents that opportunity. With each downtick, the conditions increasingly favor a price-rocket ignition spark.

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Update 17 Sept 13h15 UTC

Just to correct the BTC-e chart from the last update below. I had drawn the Fib Extension tool to show a target at $455 – which was a reaction level – but more correctly the wave target was at $452 as shown in this 15 minute chart:

BTC-e 15m 17 Sept 2014

Update 13h50 UTC

The BTC-e chart is of interest today because it is making a regional low for the decline since 21 August. The hourly BTC-e chart has a target at $455 which should see price reverse to the upside. The intervening weekly pivot S1 may repel price before it can reach $455. What price does on the way up – and how it does it – may give us the first signs of confirmation we need to call the decline over. Stand by.


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BTC-e hourly chart 16 Sept 2014

Last Opportunity For Bitcoin Price Decline (10h00 UTC)

The 4-hourly Bitstamp chart shows that price action has formed a similar structure as had preceded strong decline in the past two months.

Bitstamp h4 chart 16 Sept 2014

BFX orders 16 Sept 2014Downside price action could either flash down to $412 or unfold as a diagonal fifth wave. What mitigates a short, sharp flash is the current state of the exchange orderbooks which show large amounts of buy orders in price’s path. Bitfinex, for example, has over 10,000 BTC buy orders between current levels and $410.

With sustained selling pressure, price could descend in a two-steps-forward-one-step-back fashion, resulting in the diagonal fifth wave mentioned previously. Decline to $412 would not register a new decline low and turns our attention to the prospect of a strong bounce from the new local low at $412.

Bitcoin Traders, As You Were

For now, our expectation of ongoing sideways consolidation holds. The Bitcoin price has done nothing but narrowed its trading range, and there is no confirmation that additional decline is underway. Only in the event that price action goes below $455, will we have reason to anticipate continued decline to $412. Price action during the Asian session had bounced convincingly off of the daily S1 level and has returned to the daily pivot level – a sign of an unsuccessful attempt to go lower. We’ll be watching those pivots closely.

Bitstamp pivots 16 Sept 2014

Bitstamp Hourly Chart 16 September

Economic Data

United States

Yesterday’s US Empire State Manufacturing Index (month-on-month) came in at 27.5 – well over the expected figure of 16.4 and last month’s 14.7. This index is considered a leading indicator of economic health as it measures the confidence of around 200 businesses in New York State regarding their sentiment about economic prospects. With the US being a hotbed of Bitcoin investment and adoption, a stronger US economy, stimulates Bitcoin adoption and investment. Let’s hope the figure is truthful…

Australia

The Reserve Bank of Australia released the minutes of their Monetary Policy Meeting earlier today that contained moderate language about generally downbeat economic conditions. Their assessment of Saturday’s disappointing Chinese Industrial Production figure was that it was “consistent” with authorities’ target. So, no worries at the RBA. Despite several Australian banks’ unfavorable attitudes toward Bitcoin of late, no mention of Bitcoin was made in the Monetary Policy Meeting minutes.

Japan – Again

Bank of Japan Governor Kuroda used to speak once every quarter, but this is the second week in a row he is addressing the market – and this week he will be speaking twice. Most market commentators are interpreting Japanese data releases as a sure sign that the BoJ’s quantitative easing program is failing to achieve its aim of stimulating the Japanese economy.

The Yen (JPY/USD) is currently trading at over 107JPY to the Dollar, and there are no technical reasons why the Yen should not lose value to 110 JPY in the coming days or weeks. Ironically, this was the objective of “Abenomics” along with an accompanying strengthening of exports, employment and inflation. Instead, what Japan now has, is a weaker national currency and a weaker economy.

Over the past year, BoJ governor Kuroda has frequently assured the market that BoJ is ready to monetize additional debt should the need arise. ZeroHedge’s Tyler Durden sardonically points out:

After all, whenever the Keynesian recipe of money printing and deficit spending fails to work, it can only mean that not enough of it has been applied. The fact that it hasn’t worked in 25 years is regarded as clear proof that even more of the same is needed.

Japan M1 Sept 2014

Japan M1 Money Supply (source: FRED – http://research.stlouisfed.org/fred2/series/MYAGM1JPM189N)

“I don’t believe that there is a limit to additional easing or that there is nothing more we can do.” – Bank of Japan Governor Kuroda in a recent television interview. (source: ZH)

Japan’s monetary base is sky-rocketing as a result of the quantitative easing spree. Compare the M1 money supply chart (above) with that of Bitcoin, below (source: Blockchain.info):

Bitcoins in Circulation Sept 2014

This morning (Tuesday 16 September) Governor Kuroda announced that Japan is “on target” to achieving 2.0% inflation and that markets need not fear: we’re half way there!

We’d expect Bitcoin (both as currency and commodity) to benefit from fiat currency implosion and the accompaying ailing global economy, ironically and sadly, but these were, after all, the conditions that gave rise to its creation.

United Kingdom

The Consumer Price Index (inflation) has remained steady at 1.5%. This figure is below the Bank of England’s long-term target of 2.0% which suggest reduced consumption despite lower food prices (!). The Housing Price Index (year-on-year) has increased to 11.7% from 10.6%.

Later today:

Tueday 16 September

Australia Central Bank Monetary Policy Meeting Minutes
Bank of Japan Governor Kuroda Speaks
UK Consumer Price Index (Inflation, year-on-year) 1.5% (as expected)
Canada Manufacturing Sales (month-on-month)
US Producer Price Index (PPI m/m)
Bank of Canada Governor Poloz Speaks

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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.