Still bearish

Trading View is showing up to date MtGox data again, so might be time for another update. Don’t think I’ll bother showing the bear versus bull forks chart which is becoming a bit of a maze of criss crossing lines.

In my last post I looked at a possible bear fork on the Chinese market data. Theres a kind of similar one on MtGox I can show here, with 2 hour candles;

It joins the second peak of the double top rather than the first peak I used for the chinese bear as its ‘B’ point. In China the second peak never made it high enough to be a double top. It still feels to me that China turning bearish happened first and is making the whole market turn bearish, at least for now.

I don’t know if I am looking at the charts with too much bearish bias because I am now short bitcoins myself but finding it hard to see many bullish signs at the moment. Heres another maybe bearish omen, that rally / possible dead cat is looking less convincing, and also appears to show a bit of a head and shoulder formation almost formed, as indicated here.

There is strong horizontal support at the level the price is at but if that is breached it might moved down again rather suddenly.

Ah well what the heck, heres the criss crossing bear versus bulls trends I’ve been watching, with 1 hour candles;

Buy and hold still looks like a good long term strategy but myself I’ve sold off some bitcoins which I think it fair to mention it since I normally recommend buy and hold. That isn’t trading advice, only what I have done.

Happy Trading.

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14 thoughts on “Still bearish

  1. Prices seem to be oscillating at CNY 5,500 / USD 900, which appear to be psycological barriers with no obvious support in fundamentals. Echoing your blog post, a rather significant correction could happen if these psycological levels are breached.

    But the correction might be milder than previous ones as the composition of Bitcoin investors and the amount of money involved are quantitatively and qualifatively different from the case last year (or just 2 months ago). The percentage of investors susceptible to panic sale, although still high, has probably decreased in percentage. Also, there are likely significant amount of funds waiting for an entry opportunity.

    So my guesstimation is that by the end of Jan. 2014, a correction would take prices down to the USD 500 range. And by the end of Jun. 2014, significant amount of sophisticated funds would enter, pushing the price up slighly. What happens next depends on the evolving stories of (1) Bitcoin “real economy and (2) regulatory updates.

    I have been looking at China closely and believe two events could potentially propel Bitcoin into mainstream adoption there in the next few years. The Chinese real estate industry is undeniably in a bubble. It is concievable that a portion of funds retreating during the burst will flow into Bitcoins. Additionally, there is a real possiblity of war between China and Japan. If Chinese look beyond their fiat yuan for storage of value during war time, Bitcoin could be a preferred choice.

  2. I’m having a VERY close look at the bearish trend right now, because i plan to buy some more coins. Now just finding the right time should be critical.

    A very interesting perspective in the comparison of the double top pattern of the 2011 bubble https://www.tradingview.com/v/RXBSwxbU/

    My rather uneducated guess would be a consolidation around 650-700 during winter?

  3. Very likely I’ll be looking to buy in again at some point too, I’m still a long term bull but at the moment the market still looks like its in bear mode to me. Who knows where it will turn, after the April peak i expected a longer fall than we got and had to buy back in before i expected. That might easily happen again, wouldn;t like to guess where but your guess sounds pretty good to me at this point.

  4. Your charts look very accurate as always, and i’m totally on your side regarding the bearish channel. In combination with that 2011 bubble overlay means it should dib a good amount this week, which will set the base for the consolidation and buyin… IF this all plays out :)

    • Could this by why BTCChina finally went back to charging a fee. Having given up the fee earlier this year one might wonder if they do know in fact if there is bad news in the pipeline. Perhaps they are trying to make some $ before bad news kill BTC or reduced volume and potential for $ from fees? Just speculating here.

    • Confirmed by a source at Alipay.

      News broke overnight there. So major sell off possible when more of China wakes up.

      Chinese payment processors are now prohibited to provide settlement services to Bitcoin exchanges.

      1. At present, RMB balances at the various exchanges are supposedly frozen and cannot be withdrawn via payment processors. The exchanges are scrambling to comply with the wind-down procedures summarized below.

      2. From now on, RMB can no longer be deposited with the exchanges via payment processors, and (ii) existing customer balances previously deposited via processors must be withdrawn by Lunar New Year (January 31, 2014). The exchanges will face sanction for any late withdrawal.

      3. This prohibition also extends to online banking facilities provided directly by the banks, meaning that from now on, a Chinese Bitcoin exchange may not accept or effect any online account transfers. Essentially, Chinese central bank (PBOC) is now interpretating the Dec. 5 Joint Announcement to say that banks and any payment processors shall not provide settlement and clearance services for any Bitcoin transactions **or any entities that facilitate such transactions**.

      These bans will create significant logistical hurdle for RMB funds to speculate on Bitcoins.

      Information below is unconfirmed.

      The source also claims that additional restrictions from the Chinese State Administration of Foreign Exchange (SAFE) are in the pipeline. SAFE enforces China’s FX restrictions. It is mad about the convergence of Bitcoin prices between BTC-China and Mt.Gox, for such convergence clearly suggests SAFE FX restrictions have been bypassed. While SAFE didn’t take part in the Dec. 5 Joint Announcement, it will soon “re-affirm” that circumvention of FX restrictions through Bitcoin transactions are criminal offences punishable by imprisonment.

  5. Bit of a rebound happening just now but downward trend looks quite convincing. Took a bit of waiting but big drop after failed support wasn’t really unexpected.

    Just been looking at that link. No idea if Chinese establishment are going to take this approach but wouldn’t surprise me. In a way its surprising its taken this long for governments to start explicitly saying anything at all, policy so far seems to be ignore it and hope it goes away. In fact I’ll be very worried if governments and banks start supporting bitcoins which I’ll take as a sign that they think they’ll be able to centralise or otherwise control it.

    If they do take that approach it will probably add to the selling pressure in the short term. Long term I don’t think that matters.

    • I agree with your short and long term outlook if govt decides to go the ways you describe. Efforts to centralize will be impossible imo…

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