ChartArt
Short

The real reason Bitcoin is doomed in Summer 2014

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
It’s been a happy couple of weeks in May, June and July 2014 for Bitcoin             enthusiasts like me. Sadly we didn't break out of the overall downtrend since falling from around 1200 US Dollar             per Bitcoin             in December 2013 so far.

I was very enthusiastic in June 2014 that the yearly price increase pattern (bubble) repeats very soon. But 600 US Dollar             is only the 50% retracement from the last all-time-high, which opens the risk possibility that the BTC             price goes lower than the 0.5 retracement in the coming weeks. The recent move from 560 US Dollar             to 607 US Dollar             ( Bitstamp price) was a bull trap and will therefore turn out as a dead cat bounce on the way down (UPDATE: The price has already fallen from 592 down to 585 since I published this chart 4 hours ago).

The Stoch RSI indicator already shows the beginning of a larger downtrend. Lacking bull power, if the Bitcoin             price doesn't break out above 700 US Dollar             that would mean that the price is in a position to continue the downtrend in the summer. And if Bitcoin             stays below 600 US Dollar             (current price is around 590 US Dollar             ) then I expect the price to test the last support area , which is around 400 US Dollar             (maybe we bounce of 425 US Dollar             or 450 US Dollar             ). If you need another reason for the current downtrend then check the volume . Here is an example by TerryKinder:

The next Fibonacci retracement at 0.618 (61.8%) would mean the BTC             price visits 500 US Dollar             again. The following lower Fibonacci retracement at 0.764 (76.4%) would bring very critical Bitcoin             price support at 350 US Dollar             . My analysis is based on many indicators besides the Stoch RSI , maybe I will post all the other signals I found so far as updates in the comments of this chart. However the Stoch RSI alone is very reliable in the weekly chart. I once made a comparison for myself with the MACD vs StochRSI and I would have made much more money (around double the amount) using only the Stoch RSI as indicator in the weekly chart to determine entry and exit since 2012 than if I had used only the MACD .

Bullish outlook: If the price goes only down to 500 US Dollar             and some very good news brings in much more new Bitcoin             users - in that case the downtrend might reverse into a uptrend. Based on the (hypothetical) very good news we could see a new Bitcoin             price rally, when we finally break the resistance at 700 US Dollar             . That uptrend would then bring us back to test 1000 US Dollar             . But we are not there yet. First the price has to clean up in the Summer the overall downtrend from the last all-time-high at 1200 US Dollar             .

I created this chart as response to the bullish chart created by ItisCalvin: Make sure to visit "related ideas" (see below) where I added my last downtrend corresponding charts.

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"The point about a prediction is not that it’s true. A prediction is either a warning or a hope. Predictions should never claim to be true. But you can claim they are possibilities that there is something you ought to think about.” - Freeman Dyson
Update: 3 months later - November 5, 2014 based on the original chart:

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Directional Trend Index (DTI)

DMI Stochastic Extreme

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FluidicFX ChartArt
Your downtrend box was right on, and should have been deeper. Maybe a lot deeper....
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ChartArt FluidicFX
The downtrend might be 60% completed today - September 3, 014

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ChartArt FluidicFX
Directional Movement Index Stochastic - September 3, 2014

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ChartArt FluidicFX
Directional Movement Index Stochastic Extreme - September 3, 2014

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Update - August 17, 2014 based on the original chart:

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Variations of the DMI: Directional Movement Index Oscillator and Directional Movement Index Stochastic

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ChartArt ChartArt
Directional Movement Index Stochastic

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ChartArt ChartArt
Classic version of exactly the same chart:

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