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break outYesterday, the Bitcoin price hit target, to the pip, at $465.00 on the Bitstamp chart.  Despite good news from many continents that show continued growth in Bitcoin, the price continues to stagnate. As always, Bitcoin’s position in the world is constantly changing. Analysis considers the possibilities at mid-month as we go into the weekend.

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Bitcoin Price Targets

For two weeks running, price has been hitting 1.618 extension targets in an alternating upside-downside pattern. The Bitstamp chart below shows the progression.

Bitstamp hourly 12 Sept 2014

An interesting feature of the progression is that the targets are narrowing in range. Each successive target is either a lower high or a higher low. The logical deduction is that price action is consolidating prior to a break-out from the $460-$490 range.


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The notion that consolidation is underway is self-evident – and has been a feature of the declining price action for several months. The chart below illustrates the phenomenon that seems to use the 200-period moving average (red) as either a target or reaction level.

Bitstamp h4 12 Sept 2014

The sense is that price is currently consolidating toward a break-out in the vicinity of the blue dot. The direction of the break-out is not certain – despite presentation and discussion, during the past few weeks, of evidence suggesting an advance. This Sunday’s in-depth analysis article will revisit the topic.

For now, we wait and allow price to show us some more action.

Economic Data and Announcements

Yesterday saw the release of the Bank of England‘s Quarterly Bulletin focused on “Innovations in payment technologies and the emergence of digital currencies” in which they provide a surprisingly accurate usage summary of Bitcoin, as well as discussions of the technical workings and the innovative significance of Bitcoin. (In fact, it pains me to say that this is perhaps the best introductory text and technical summary of Bitcoin on the net). CCN’s Clay Michael Gillespie reports here.

The Bank understands exactly how Bitcoin works and foresees its many risks, including the direct risk to central banking:

Potential risks to monetary stability would only be likely to emerge once digital currencies had achieved substantial usage across the economy. If a subset of people transacted exclusively in a digital currency, then the Bank’s ability to influence demand for this group may potentially be impaired.

It is amusing how, in the course of discussing their nemesis, they casually mention their conscious objective “to influence demand” and speak (with that inimicable attitude of the establishment) of “potential risks to monetary stability” – as if the wheels hadn’t fallen off the global economy a long time ago.

The Royal Bank of New Zealand, in the meantime, made a Monetary Policy statement without mentioning Bitcoin at all. Must just not be an issue for them right now.

Yesterday’s US Unemployment Claims came in at 315,000 US citizens without a job, which was 9,000 more than the expected figure of 306K. The release was followed by price advance in both the S&P500 and US Dollar indices, while Gold and Bitcoin continued their pre-existent downtrends. Bitcoin eventually reversed to the upside from a technical pivot, but poor Gold just kept on going down – currently trading at $1,238.

Today sees the release of US Retail Sales and Consumer Sentiment Expectations. Poor performance in these is speculated to herald renewed QE from the Fed.

Tomorrow, Saturday 13 September, China will release year-on-year Industrial Production figures – a data indicator of massive importance and with the potential to create market gaps at the open on Monday. Bitcoin’s exchange market will be open throughout, and with less extreme reactions, so the impact of this release will be watched with interest.

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 sessions should any significant changes 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.