Bitcoin Price Report for November 4, 2016
Nov 4, 2016 --- (ARCHIVED) Free Reports
Market Commentary (BTC):
The correction we had long been waiting for finally came yesterday on unconfirmed rumors that China would once again be cracking down on bitcoin capital outflows, as well as more serendipitously timed maintenance downtime from Bitfinex. Admittedly, neither of these factors were all that compelling to us fundamentally speaking, although we did see them as legitimate triggers to what the technicals had been forecasting for some time. While it looked as though more downside from the new 670 $ local low was all but guaranteed yesterday, there were and are some very peculiar characteristic of this move that have us rethinking whether or not a regional bottom is already in (Spoilers: [members-only text]).
The first thing to note is the magnitude of the selloff over the past few days. We started at a regional high of 745 $ and pulled back to 670 $, a 75 $ drop on ~750 $/coin. That is 10% on the nose, and what defines a proper "correction" is a 10% move from high to low. Interesting. Additionally, there were many margin calls on multiple trading platforms during the day yesterday, yet settlement overnight was anything but discouraging. Convenient. Finally, there are many technical signs already emerging on many timeframes that show the bulls bought the dip and continue to do so. Healthy.
Having said all of that, lets get to a few charts that should put us in the right mindset technically speaking going into the weekend. First we will show an updated 3-day chart which we have not seen in quite awhile. Notice the bullish market structure bottom around 500 $ and the [members-only text]. Also note that price looks like it is trying to put in a textbook cup & handle formation, of which the "handle" section is just beginning. Additionally, we have new dynamic support now sitting at the [members-only text], total exchange volumes are confirming the upward bias, and the A/D line continues to move higher regardless of near term directionality.
On the other hand, Willy and the Stochastic remain extremely overbought, RSI is rolling over, MACD is still painting a big bearish divergence off of the old 778 $ top, and volume profile remains porous all the way down to the medium term OTE long zone between [members-only text]. Ultimately will think this chart is very bullish from a longer term perspective, however we remain hesitant to say that the correction is over given that cup and handle patterns typically retrace 1/3 of the cup's move which would target a low in the [members-only text] area. [members-only text].
Moving on to the 6-hour chart, price is now in the upper wedge created by the broken near term uptrend line and the intermediate term trendline. Also notice that the spike down to 670 $ yesterday tagged the top half of the OTE long zone before bouncing, which created new SCMR dynamic support at [members-only text]. Additionally, we had a [members-only text], however this most recent downdraft has turned the current candle [members-only text].
Regarding momentum and volume, Willy, RSI, and the Stochastic have all pulled back significantly from their overbought levels, although it appears as they still have some room to run to the downside, while PPO is back to neutral and the A/D line continues higher. There are rather mixed signals still on this shorter term chart, so we will stick with the plan of [members-only text]. However, if we see further signs of strengthening support around current levels we are willing to get long again in the [members-only text] region.
To sum up, there is no change to our longer term forecast, nor our shorter term one which calls for [members-only text]. Having said that, given the volatility over the past 24 hours we would not be surprised to see the market cool off this weekend by consolidating in the [members-only text] area, which means conditions could be ripe for "buy the dip, sell the rip" type trading over the next few days.
Have a great weekend!
Posted ProTrade Ideas:
1.) Bitcoin ProTrade - Very Short Term: Previous trade closed. No new ProTrades at this time considering conditions are suboptimal.
2.) Bitcoin ProTrade - Short Term **[UPDATED on 11/4/2016]**: We will consider a [members-only text] position in the [members-only text] area with a stop around [members-only text] and a target of [members-only text].
3.) Bitcoin ProTrade - Medium Term **[ACTIVE; UPDATED on 11/2/2016]**: We will stay [members-only text] off of the [members-only text] level with a stop around [members-only text] and a target of [members-only text]. We will add to the position on a pullback to the a [members-only text] area.
4.) Bitcoin ProTrade - Long Term **[ACTIVE; UPDATED on 11/2/2016]**: We will stay [members-only text] off of the [members-only text] level with a stop around [members-only text] and a target of [members-only text]. We will add to the position in the [members-only text] area.
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