Bitcoin Trading Alert originally sent to subscribers on September 23, 2014, 10:24 AM.
In short: we don’t support any speculative positions in the Bitcoin market at the moment.
Long time no see. The time off helps take a fresh perspective and this is how I’m approaching the market now that I’m coming back from holiday.
Before I went off, I gave you several specific clues as to what scenarios might unfold. Recall the bearish scenario I outlined on Sept. 5:
The second broad scenario is one where Bitcoin stays below $500 for a week from now (without major moves) or moves lower sharply. In such a scenario, shorts could be appropriate with a stop-loss at $515 and a take-profit at $440.
Bitcoin didn’t move much in the week following this last alert (Sept. 6-12) and stayed below $500. By following our scenario analysis you would have opened shorts on Sept. 13 around $473. From there on, Bitcoin seemed to go into free fall mode and hit our take-profit on Sept. 18. By following the scenario mentioned above you could have earned a return close to 7% (excluding transaction costs) in less than a week.
How’s the picture now? Let’s take a look at the charts now.
On BitStamp, we recently saw a serious slump from about $475 to $400. The move was accompanied by a surge in volume and followed by a period of stabilization which we’re seeing at present.
At the very moment (this is written around 8:50 a.m. ET), Bitcoin is wrestling with $400, but the most important level to observe is $378.78, the most recent low. Actually, after the recent slump we wouldn’t be surprised to see some more action, albeit weaker, possibly a reversal but not one pushing Bitcoin decisively higher.
Our bet at this time is that a move below $375 could result in further depreciation, possibly to $350. On the other hand, a move up even to $450 wouldn’t necessarily change the current bearish outlook.
On the long-term BTC-e chart, just as on BitStamp, we also saw a strong move down. What is more, Bitcoin has stayed below $400 which might point to additional weakness, particularly if we see more daily closes below this level. The situation here is not decisively different than on BitStamp, but slightly more bearish nonetheless for the short term.
The level of $350 is an important one as it might be the first step on the way to $300. Overall, if Bitcoin stays below $400 without a move up, we might bet on the currency declining to $350 or possibly even $300.
$350 might be a very important level for both BitStamp and BTC-e as it is the point at which the April decline stopped. Any move below this level could have further strong bearish implications.
If Bitcoin goes below $375 on either exchange in the hours to come, we might consider shorts with a stop-loss at $400 and a take-profit at $340. This is not the case just now.
Summing up, we don’t support any short-term positions in the market at this moment.
Trading position (short-term, our opinion): no position.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts
