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Green east traffic signThe Bitcoin price is approaching the lower $400s again after hitting $450 following Tuesday’s PayPal announcement. A familiar pattern is re-emerging in the chart, and direction remains sideways.

Bitcoin Price Is Going… East

Trade has pulled the Bitcoin price back to the midway point between the lower orange support and the light blue dashed trendline that capped advance on Tuesday. Any tactical advantage of having climbed above both the 20-period and 200-period moving averages has been lost.

Bitstamp Hourly Chart

Bitstamp Houlry chart 25 Sept 2014

BFX_orders_25Sept2014Although the immediate BitFinex (right) orderbook bias indicates that market participants favor advance from $400 there is, nonetheless, a persistent downward pull on price via large market orders that (due to direct execution) never enter the orderbook. One wonders what could possibly motivate a trader to sell 50 BTC lots toward a cluster of 8,000 BTC orders waiting $10 lower down in the book? Are they that clueless or are those sell orders, in fact, logistical?

The hourly Bitstamp chart (top) displays oversold indicators and a preference for a wave up. However, the 4-hour Bitstamp chart (below) shows neutral MACD and RSI indicators with the stochastics still grouped in over-bought territory. The 4-hour chart, therefore, does not confirm the hourly chart and, barring a persistent move north, the immediate prospect seems to be continued sideways price movement with no new lows or highs.


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Bitstamp 4-Hourly Chart

Bitstamp H4 chart 25 Sept 2014

One significant feature of the 4-hour chart is that price is still above the 20-period moving average. As will be explored in this weekend’s in-depth analysis article, trade above the 20 MA regularly heralds advance to the 200 MA – currently heading toward $465. If the market relinquishes this advantage then, we will be looking to the lower orange supporting trendline that has been – and is still assumed to be – supporting price. A breach and continuation below the orange support would bring the prospect of $360 and then $300 into immediate focus.

News – even objectively positive news – does not in itself determine the market’s direction. For now, it’s sideways for the Bitcoin price direction with PayPal apparently relegated to the “wait-and-see” pile.

Summary

Realistic expectation has trade continuing mostly sideways until price advances beyond $450 or, alternatively, declines below the orange support currently cutting through $400 just below. You can bring a horse to water… but you can’t make him trade in the opportune direction with immediate effect. Market participants are still deeply cynical due to the relentless decline that they’ve endured for close on ten months. The Bitcoin price may lunge north at any moment but if it becomes apparent that we are being herded into the next extended leg of decline, then we have no choice but to use the opportunity to buy cheap bitcoins.

Leveraged traders may consider staying the course despite deep corrections back down to the orange support. Weigh your risk and reward carefully since, until the orange support is broken, it can only be assumed to be acting as support.

Economic Data and Announcements

Several data releases out of the US and Japan means today is a good day for trading the Yen pairs. The Japanese Yen (USD/JPY) pair is approaching the 110 Yen level and the Dollar Index (DXY) is topping 85.4 in it’s tenth week of advance.

Implications for Bitcoin are indirect, in that the Bitcoin price is not linked to the US Dollar basket of currencies and, therefore, is not directly affected by fluctuations in the US DOllar Index.

The wider economic implications of gradual economic collapse in Japan or of US employment and consumption are moot, as the global economy keeps limping in its zombie-like state toward a cliff. Can the Orwellian caretakers of the economy make good? Will Bitcoin change it all for the better? Does it make sense for the Bitcoin community to call for these same Orwellian captains to regulate Bitcoin – to make it ‘stable’ and ‘credible’? PayPal doesn’t seem to care… or do they know something that we don’t?

Thursday

12h30 US Core Durable Goods Orders (monthly)
expected: 0.7% (previous: -0.7%)
12h30 US Durable Goods Orders (monthly)
expected: 17.7% (previous: 22.6%)
12h30 US Unemployment Claims
expected: 294K (previous: 280K)
23h30 Japan Tokyo Core CPI (annual)
expected: 2.7% (previous: 2.7%)
23h30 Japan National Core CPI (annual)
expected: 3.2% (previous: 3.3%)

[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.

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.

Bitcoin price charts from TradingView.
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.