Hello and welcome back to a quick update from my previous post.
I will start the article by listing any changes made from previous chart, followed by my conclusion.
Below the conclusion I will try to "defend" my conclusion and go more into details for those who are interested in: the why.
Finishing off with the China News promised from the title.
Changes
- Fine tuned the Trend lines.
- Added RSI
Conclusion
Neither the RSI, Stochastic or volumes are giving any indications that we will break out of the triangle on the upside during this week.
However, there are two large news that can impact the market in any way: China new Digital currency and EU banking draft on digital currencies.
These two news are wild cards and will hit the market one way or the other.
I am still holding off my trades as of now.
The why
I added RSI to be able to compare it to the Stochastic, because I wanted to see how much they eventually differ. Stochastic are better when the marked is trading side-ways and choppy, whilst the RSI thrive during trending markets. The difference between the two will give me an indication of the volatility where I would lean more towards the stochastic as "truth", since we are in a side-way market right now.
- The Stochastic is under its moving average, which is not a good sign, and nearing its bottom at index 20. I spot no divergence on the stochastic.
- The RSI is not telling anything comforting as far as I can see, and it is not different from the stochastic (the pattern, high and low and trend line although the actual values differ).
I see no technical indications on the chart that this will form a break out this week on the upside, but it seems that the momentum is rather sluggish and have higher probability to go down to next support line.
With this in mind and the two news mentioned earlier, I find it is too risky to make any trades at the moment.
To balance best Vs worse in case of no trade.
The best case is that the price go down and I do not lose money but gain a buying opportunity.
The Worst case is that the price goes up and breaks the triangle. However, it is not likely it will break the triangle by a lot, and stronger possibility that the previous resistance is the new support. If that will be the case, I would not have missed a lot of possible profit and something I would be more OK with than the opposite.
News
China is buying back A LOT of gold and they are this month releasing their digital currency. This can mean one of two things: The gold is to back up and strengthen their FIAT, or this gold is used to back their digital currency.
If the latter, then what will that effect be on the price of bitcoin?
Even though the Chinese digital currency is HIGHLY centralized and controlled, and no where close to compete in BTC for availability to the people. It will however be a very strong currency in the existing financial institutions. Venezuela did try to do something similar with their oil backed currency, but let us not compare the financial power and influence of Venezuela and China ;)
Personally, I think this digital currency of China will trigger a wild fire.
Other countries will try to back their own currencies with gold, and start to seriously look into creating their own digital currency (EU is already making that draft).
I believe the price of BTC will take a small hit.
