Long Term Update: at support

chartIn the last days XBT/USD started to break below the long term VWAP (~$445) and if it makes further downside progress the breakout will become very obvious.
It would probably be followed by a move down to the old April 2013 Top at $266 confirming the giant descending triangle that it is forming.

Such a breakdown would be very bearish IF accompanied by a dropping network difficulty as happened in 2011 during the bear market.

As you can see in the attached chart that on the two previous tests of the VWAP (December bottom at 382 and february bottom at $400) the market reacted strongly and quickly instead this time it is spending too much time around the same support, this is an indication that probably XBT/USD is going to break below it.

In case of a confirmed break below $440 for this week support level should be around $330-$350, i don’t think that XBT/USD will go straight to 266$.

So far I have been talking about bearish potential. There is still a chance (probably 20%-30%) that this potential will not be realized and that new bull market highs lie ahead if XBT/USD stays above long term VWAP. In case of a reaction from here first resistances are at $550-$580.

 

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76 thoughts on “Long Term Update: at support

  1. Elie

    Thanks Enky, I will look out for the 330-350 range first and see how the volume vs the buyer/seller ration is then see if I buy in. If not I will stick to the 266 which I am mainly aiming for bcse of the new Chinese ban. by the way if you are wondering why there was a BTC drop this early morning in China here is why:

    BTER just halted their CNY deposit due to a recent notice from the government:
    https://bter.com/article/402
    http://www.reddit.com/r/BitcoinMarkets/comments/21sxpj/its_official_bter_just_halted_their_cny_deposit/

    Translation of BTER Official Statement:
    Hello. We’re very sorry to announce that, regarding deposits, Bter just received notice regarding official regulations that makes it impossible to avoid the temporary suspension of deposits. Withdrawals are unaffected, and as before will be received within 2 hours. Everyone can still perform normal withdrawal operations at their leisure. Bter upholds its promises and commitment to maintaining 100% deposit liquidity and customer withdrawals will not be affected. Bter provides over 40 types of cryptocurrency exchange, and is the largest Bitcoin and cryptocurrency trading platform in China. It is also the world’s largest dogecoin, futurecoin, and Counterparty (XCP) platform, and is listed in Alexa’s top 1000 Chinese website ranking. “

  2. petromag

    Hi Enky
    I already see the devil behind every corner. Could this be related to a descent price mtgox? That is about “rediscovering” lost bitcoin and their placement on the market? Then compare the price starting position?
    It’s a strange design, but it is meaningless?

  3. vanen

    mmmhh… as soon as it reaches the 430/440 range, i’m selling and setting a limit order at 340

    1. Arthur

      Good idea, vanen. I’ve put my remaining cash (from the coins sold at 501) already on a Limit Order of 350. Good luck, fingers crossed. 🙂

      1. vanen

        well, i think you’ll be ok haha^^ fingers crossed!
        i sold everything at 457, but i’m really not sure if i should have, the market did break below 440 but it was 438 so i don’t know if it counts… i’m not feeling it this time lol

  4. A Coinfiend

    Enky,

    Thanks as always for your analysis. I have a sneaking suspicion that most BTC speculators, even long-term speculators, are ready to get out of the market because of the increased economic uncertainty added by Russia, increases in oil, etc. But more importantly, severe concerns over US quantitative easing, and the possibility of an eminent freeze in a particular financial market (i.e. Comex), as has been covered by titans like James Rickards (see also: https://www.youtube.com/watch?v=KXGPzDq45gM ).

    I am curious to know 1) your current take on the manipulation going on in the gold markets, whether the recent double-bottom is signaling another wave of investment into precious metals, and 2) how outside economic factors, like the ones I mentioned and others, are likely to affect the spot-price of XBTUSD in 2014.

    TIA

    1. I don’t think that this market is enough big to be affected by big economic factors and regarding gold i think it remains in a bear market, 1310 support failed, it is now headed to 1050.
      gold to 50k? the chart discount everything and as i said it is bearish.

      1. A Coinfiend

        I’m not such a believer in the 50k gold price, as I am in the potential for trouble in the gold markets. According to multiple experts, the US government is tremendously oppressing the price of gold in the paper markets through the use of blind shorts. They highlight how the US has failed to deliver the entire quantity of Germany’s own gold, as was demanded by them. They say the gold market is running on fumes, and the ability of our government to continue manipulating prices in the paper market, is only sustained by the limited gold reserves they have. If they run out of gold reserves, the party comes crashing down. The real implication, according to pundits like James Rickards, is that the dollar could lose 80 or 90% of its’ value overnight, and that this could all happen so fast, there would not be time to get your money out, even from the stock market. As for the broader economy, I mostly agree with you concerning the down-side, but I think the upside for BTC could be huge if there were ever a loss of confidence in the US dollar. All of this was the basis for my questions.

    1. it is a series of retracements in a long term bull market, i don’t see nothing strange in it, bitcoin long term trend is still up and it is following an up channel on a log chart. It is obvious that now btc is close to a critical juncture as long as it is approaching the end of the triangle. It needs to go up soon to respect that price channel.

  5. dude

    “So far I have been talking about bearish potential. There is still a chance (probably 20%-30%) that this potential will not be realized and that new bull market highs lie ahead if XBT/USD stays above long term VWAP. In case of a reaction from here first resistances are at $550-$580.”

    Would you like to adjust your probability for this bullish scenario (20%-30%), because of biggish buys that we have seen today? Maybe these people that own(ed) together over 200k coins doesn’t want long bear market so they start to buy now until the trend stats to bend. =)

    1. it is not enough that buy. I remain stick with my view and the ratio between buyers and sellers remain negative on a weekly chart.
      We will see if there is enough power to move above $550-$580

      1. Arthur

        Exactly my feelings today. As we say in NL: one swallow (the bird) doesn’t make a summer yet, so I took the opportunity to sell at 485 when it jumped to 487. A little too soon as I noticed the price jumped to 509 later. C’est la vie…

      2. vanen

        guess we are on the same boat lol, sold at 457, 479 right now… do you think i should stop the harm and buy again as soon as possible or wait for a possible drop?

      3. if you are 100% flat it is wise to hold some bitcoins and in crease if it will fall to $250-$300, as i said many times as long as it stays above long term vwap ($440) the trend is bullish.

      4. Arthur

        Asking me, vanen? I sold 10 at 485 because I expect the price to drop to 440 again, at least. That’s where I put my Limit Order for the moment, for a little in-between-trade that might bring in 0.9 coin. And Enky seemed not impressed either by this little jump up, so I should wait a bit more if I were you… Still a lot can happen this week, you know?

      5. vanen

        i was asking both of you. i too wasn’t very impressed by the jump, i think the struggling at 480 shows itself that it’s probably going to drop sooner or later, but i know yoo few on bitcoin to rely on my own observations alone, and as soon as something do not go as i planned i start to freak out haha ^^ i hope this will turn out well…

      6. Arthur

        Yeah vanen, I know exactly what you mean. On my first few trades I was very nervous, and sometimes I felt like taking a loss or just a tiny profit with a price difference of $10. And the latter I did a few times when I had no clue whatsoever what to do… However, I also learned to be patient, and see the big picture (supported by the tech info of Enky). My longest trade so far took 6 days! Within the big picture you have to try to sell high (when it spikes up and takes a little rest of like 15 minutes or so) and buy back low. That’s obvious, but only works well when you put your short-term nerves aside. Look beyond them and only then make a decision. Stand above the material like a poker player, and take the short-term opportunities in the long-term market. I hope you get a feeling for what I mean… And don’t get me wrong, I’m still a little nervous with every trade I do. But I made it a fun part of the game of trading, not a decision making instrument.

      7. Arthur

        “is the 440 vwap still valid after this drop?”

        It probably changed from 444.62 to 444.619999 for a few minutes, and was generously compensated by the period that the price was above the vwap again after that. Everything above the vwap adds to the vwap rising (bullish trend), everything below the vwap adds to the vwap dropping (bearish trend). The price dropping above vwap is more or less a correction in a (still) bullish trend, because the vwap is still rising meanwhile. That’s how I understand it at least…

      8. vanen

        omagad then i made a mistake… i hope it’ll drop a little bit, because then i’m fucked up lol, i had to use some of the sold bitcoins for bills because i had not enough money this month so i guess i will almost be back at start :/

      9. vanen

        PS : the link given above about vwap was super duper helpful, i thought vwap was like once it drops under it (like it did) then it’s over, but hell no this is way more complicated. thanks BK

        i don’t really know what i will do, buy as soon as possible again, or waot for a drop… i’ll let it settle tonight and tomorrow morning i’ll figure what i will do, i hope it won’t just jump during the night haha ^^

    2. vanen

      mmmhh.. all morning, i was lile watching the market evolution, trying to buy back at the lowest point i saw, during hours!, during a few hours, the lowest seemed to be 477, but everytime i try to buy it would go to 480/485 in a few second, and now i’m very cautious with how instant orders works. when i finally manage to buy at 477 (after 30 min , yayy), then the price drops to 465…. i’m so lucky xD

      1. vanen

        i mean, it was like 5 seconds after !! i was like ” T_T ” (smiley of a man crying lol) xD

      2. Arthur

        And it’s dropping even more. Read again, my friend vanen… “I also learned to be patient, and see the big picture (supported by the tech info of Enky). My longest trade so far took 6 days!” (which I have to correct now, it was 9 days that I had to wait the longest for a proper buy back). Lesson learned!?

      3. vanen

        yeaah.. you know what’s funny? i saw it coming, but i told myself “vwap is still 444, so i’m going to act prudent and buy back” lol. i’m even sure it’ll drop again and again xD i knew that was coming, i knew it!!! that’s how you learn the hard way lol

        hopefully i only lost 0.1 bitcoin so i guess it’s okay, next time ima beat this loss ass mouahaha i’ll be super duper careful

      4. Arthur

        Yeah… Meanwhile ka-tsching! my trade of sell at 485, buy back at 440 was successful: 0.97 extra coins is in da pocket. 🙂

      5. vanen

        lucky bast**d !!! i hope you’ll die drowning in your money xDDDD (kiddin’ ) great move anyway !

      1. Marc

        Crap I read that and got really excited that China couldn’t impact the market so much anymore. Now that I think about it, it does seem counter to what Bitcoin stands for and rather extreme…

  6. Arthur

    With hitting 430 for me the vwap resistance line is clearly broken. Sold some coins at around 435, limit order at 350. Changed the other limit order from 350 to 275 (that’s still the cash from my 501 sale).

    1. vanen

      well, i sold mine at 440, and limit order at 350 too a few hours ago. i hope we will make it!

      1. Arthur

        Buy 18 coins at 275, buy 17 coins at 350. Didn’t sell 10.5 of 34.5 coins, so I’m roughly 2/3 in trading now.

      1. Arthur

        There is a thought behind my 2 limit orders. Enky expects a resistance at 330-350 so when that happens and the price jumps up to let’s say 390 from there, I have 17 coins to sell and use the (extra) cash to buy back in again at 350, or lower. This ‘trick’ I used yesterday with the 485-440 in-between-trade, and might generate at least 2 extra coins. When the resistance is not working for a temporary jump, I have at least secured the (extra) coins at the 330-350 range, with lower risks on my remaining cash, in case the 250-300 range is not reached. Or when the resistance is so strong that it turns out to be the bottom of the price, I have also secured the coins at 350, and can use the cash of the current 275 order to buy back in at let’s say 425-450. Since that is the cash of the 501 sale, it would still be a profitable trade. Just a thought about spreading risks and keeping the options open for maybe some extra coins down the road…

      2. vanen

        ah, i understand the logic behind that , what you did looks very secure and loss proof , well done bro

        i don’t do that because i prefer to set the lowest limit order possible (too few bitcoins, if i had to split up everything in smaller trades well it would be hard to be profitable),and then i always end up cancelling the limit order and buying back manually with instant order due to the bottom price always being a tad bit higher or much higher , and so far that’s the only thing i rock haha ^^ and with your great advice, about waiting for a drop that settles at least 15 minutes it’s a lot more secure than it used to! it’s more of the “when to sell and not start to freak out when it gains value afterwards” that i still have trouble with .

  7. FJ

    What’s the deal, really? Stay cool and keep your coins and in eight months you can sell them for 2000. Or 3000. I am buying now and whether I pay 430 or 450 is uninterresting. There is so much going on that even China can not stop this snowball. FJ

    1. bcmine

      The deal is that, we are trading and will win your money. You are gambling and in a long term you will lose everything.

    2. Arthur

      Naah, that’s maybe a bit unfriendly, to say it like that. All holding and/or trading with a long term view, hope for bullish scenarios like the Winklevoss bros, and others, expressed. Trading for me is pure fun, but it involves a lot of risk too, on top of the risks that come with bitcoin. Just buying low, holding, and speculate with them on a 1 year view is a strategy too, you know. No need to flame each other down here, this is a nice place, let’s keep it that way, ok guys?

    3. Andrea Chiavazza

      Yes that is precisely what I have done too. I put all my savings in bitcoin when it was at around $130, because back then I saw so much potential that I thought that buying at $100 or $150 made little difference. Well I would say that I’ve been proven right. Now I’m still holding to them for the same reason. All form of money of course are useless unless they are spent at some point. So as soon as we’ll get to $2000-$3000 I think I will buy a little house in a place with a nice weather, and then just enjoy life =)

      1. FJ

        Good for you. Give me your address when you move and I’ll buy the house next door. Wee’ll split a few six-packs and watch reruns of two and a half men. Savings? I borrowed 25000 USD to buy bitcoins for and if this fails I will have to sell my wife and children. (win-win situation) But you know, if you don’t have cojones life may easily suck. Take care, FJ

  8. B. Mums

    Enky, I owe you a tip once this all settles down, you are da man! 🙂

    I’ve been doing fairly well these past two days. I’m on my way to well over 6, possibly 7 coins depending on how this night turns out. I’m in all fiat at the moment, last sold when it peaked at 438. I’m likely going to set a buy-in tonight for…the high 300’s, I always play it safe.

  9. oardo

    I have a doubt with the 1year VWAP working here as there are no strong reactions around : as a support in the last days, very low volumes reacting, now after the breakout we don’t see a big drop. Previously the long terme VWAP perfectly work as a support, now I don’t know what to think when the price stay just under it. What about the 1year EMA (around 420$), could we find support here?

    1. there is always a tolerance around a support, at least 5%
      also the 1y ema might be valid and within 5% from vwap

    2. Arthur

      Thanks guys, for bringing this up. Makes it more understandable why the price is floating around in the 415-450 range today. I expected a rather clear high 300 today, but maybe we have to wait for that a little more…

  10. HG

    Are people trading using the standard buy/sell orders via the main exchanges such as stamp/btc-e/houbi etc?

    Or are most of your using the margin trade functionality of Bitfinex?

    1. Arthur

      I’m trading manually, with the Instant Sell and Limit Buy Order options on Bitstamp. I’m quite sure my clumsy, but so far rather profitable way of trading (+45.7% more XBT position in less than 2 months) can not be outperformed by any trading program. 😉

      Kidding of course. In a market going down it is rather easy to score a few extra coins. However, I can not trade at night, which might be a reason I want to check out some program sooner or later.

      1. HG

        I’ve been using RTBTC since Blockchain nabbed it. I really like the way I can have my own layouts across multiple resolutions but it only supports BitStamp at the moment. It’s great for being able to place market and limit orders quickly as I can see the order book, last trades and chart at the same time, a bit improvement over placing orders directly on Stamp’s site.

        I’ve also been using BitFinex recently for a bit of margin trading, but this is much newer to me. If i’m correct Finex no longer uses Bitstamp for liquidity? That would mean there are no margin orders on Bitstamp?

        Enky that BTX Trader looks really nice. Is it still in development?

  11. Eric

    Hi Enky,
    What do you think about this two days rise? I don’t see a change in the long term trend yet, but would appreciate your analysis.
    Thank you very much !

  12. Steven

    Hi Enky,

    good analysis, thank you!

    Would you revise your current forecast considering the short-term uptrend showing us some buying strength?

    1. No, short term analisys is not much useful in this tiny market, better to focus on long term signals derived from analysis done on higher timeframes (like 3 days or weekly chart)
      i’ve nothing new to add, my opinion is the same of the last published update.

      1. Arthur

        Understandable. Very low volumes, price floating in vwap zone. No clear direction towards 550-580 whatsoever. We expected ‘live or die’ last week, it turned out to be ‘survival’. Probably this week will see some fireworks. I left my bets untouched in the 300’s and 200’s for the moment.

      2. MS

        My guess is that people are waiting to see if anything will happen in China on the 15th. If that’s the case then we are in for another slow week.

    1. Arthur

      Almost 8,000 on my birthday this year, wow. I would sign for it. On CoinDesk over 50% thought it would reach 10,000 this year in a poll earlier this year. It might happen, it might not. So far I see a lot of Enky’s predictions come true, and they foresee 3,000-3,500 by years end. And for the moment we still have to deal with a downtrend, so I’m keeping my feet on the ground… Let’s cheer when we are there. 🙂

      1. Marc

        So I read all these ‘predictions’ in the multiple thousands and they just sound ridiculous. Even a discussion among bitcoin developers or something that they feared it may hot $10k this year… I’m thinking maybe around $1200 by the end of this year max. Enky do you have any comment on these outrageous things being discussed?

      2. Arthur

        “And for the moment we still have to deal with a downtrend”

        And here we go again… It just hit 400 on Bitstamp. I changed my limit order of 275 to 335 (meanwhile leaving the other one on 350), just a guts feeling that it might not hit the (high) 200’s soonish. Better do multiple trades step by step, I guess. On a somewhat longer term, something tells me that probably only when we reach May or maybe even June, that we will see some uptrend again, and get out of that triangle*. I might be wrong of course, but these Mt Gox and China issues have more, and longer, impact on the market than I previously thought. It remains to be seen where that triangle is closing (in the 300 range or 200 range?)

        *”It is obvious that now btc is close to a critical juncture as long as it is approaching the end of the triangle. It needs to go up soon to respect that price channel.” (Enky, April 1)

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