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At this time it appears that the next bitcoin price wave is breaking to the upside. If the bullish mania is not too eager, price could still make a penultimate or final wave to support at the lower grey trendline (and red 200-period moving average) before the surge continues. A cautious reminder in the chart is explored.

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Bitcoin Price Analysis

Time of analysis: 15h14 UTC

Bitfinex 1-Hour Chart

Bitfinex 1-Hour Chart

From the analysis pages of xbt.social, earlier today:


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The market is herding to trade this breakout to the upside, but we have to be careful of making up our minds based on appearances. There may be deception or, simply, incorrect perception at play, so also be prepared to trade to the downside. A typical chart formation prior to a drop is that the market trades price to above the 200MA and then a sell-off occurs. An example is circled in the middle of the chart.

The spanner in the works is circled in blue on the left of the chart – notice the similarity to the current price pattern, where price was also coming down from a high. In that case price was consolidating above the red 200MA (in most charts except the OKCoin futures) in order to break below it.

At the previous breakout Bitcoin pushed to its 1-hour 200MA and then snapped down to a supporting trendline prior to the surge higher.

Buy-and-Hold investors
should buy a half position of bitcoin if price advances today. The move higher (+/- $13) should take price to the top of the correction channel illustrated in the xbt.social update of 04h00 UTC Tue 29 September. That is also the location of the 1-day 100MA where price has, in the past, reacted strongly. With both these factors at play, we’d expect price to return to current levels from where investors can make additional purchases for the rest of their position – or potentially from lower in the chart if a larger decline sets in.

On a breakout to the downside, buy-and-hold investors should consider building their BTC position at $220 and $210, but it is advisable to not go “all-in” until we have confirmation that more decline is ruled out.

That cotton trade was almost the deal breaker for me. It was at that point that I said, ‘Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?’ – Paul Tudor Jones

Summary

If the move to the upside gathers momentum and the 5-min, 15-min and 1-hour charts show our standard xbt.social MA buy signals, that will open our Buy recommendation. To the upside we have a target at $252 but a save initial take-profit is at the previous high near $248 (Bitfinex). If price reverses from above the 200MA and a sell signal forms to the downside, that will open the Sell recommendation. The target remains $210, but remember to employ a dynamic stop loss and beware price does not bounce at the level of the previous low near $220.

Bitfinex orderbook depth and Buy/Sell Volume:

 Bitfinex depth buysell volume 22h05 011015

Click here for the CCN.LA interactive bitcoin price chart.

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Readers can follow Bitcoin price analysis updates every day on CCN.LA. A Global Economic Outlook report is published every Monday.

Disclaimer

The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.

Bitcoin price charts from TradingView.
Image from Shutterstock.

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