Is Bitcoin Price Nearing a Bounce? Bitcoin Price Channel.

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Currently the technical indicators for Bitcoin             do not look favorable for the price to bounce. Price has been in an upward channel since April of this year.

Price, depending on whether it continues to drop and how rapidly, will encounter the bottom of the channel at around $580 or below.

Normally, price would move back to the mid-line of the channel. While the technical indicators appear to be reaching for a bottom, they haven't necessarily reached it and do not currently show any signs of turning back up.

At this point I am waiting to see what happens should price reach the $580, or slightly below, level. I don't intend to be a buyer of Bitcoin             until the indicators turn positive. In the case of most of the ones I have below there would have to be a bullish crossover to get me to go long.

Should price fall out of the channel that would likely be reason to exercise caution as the price could break lower should it exit the channel.

So, for now, I will wait to see what story the price action and indicators tell. I suspect we will at least test the bottom of the price channel if not breach it.
The channel was broke when it broke down out of the last wedge. What is your channel based on?
+1 Reply
TerryKinder MoonTrader
This price channel isn't related to either the wedge or the descending triangle. The descending triangle was my interpretation of the Bitcoin price pattern.

The Bitcoin price channel is simply a price regression channel drawn from the recent low Bitcoin price in the $330's to the current price. The chart is really just another way of looking at the Bitcoin price pattern and trying to determine which direction it will go.

While you could certainly consider it in light of other patterns, that isn't what I'm doing with it.

My thoughts are - just because the Bitcoin price broke down out of the descending triangle doesn't necessarily mean the price has to break out of the price channel in this chart. It could.

If I had to guess I would say that price will at least breach the price channel. The indicators still look pretty weak. There are quite a few Bitcoins that will be sold on Bitstamp at the $590 level - over $900 at this point. So apparently, somebody thinks that level is significant for whatever reason.

My Point and Figure chart (not featured here) shows valid lower price targets of $360, $260 and $140. Don't know that $260 or $140 will be hit, but they are still valid targets.

If the price channel is breached and there is a full candle beneath it, then I suspect we will re-test the $555-$560 range. Below that there are quite a few prices bunched together. At this point, I'm just waiting to see if price breaks below $590 and then if it breaches the bottom of the price channel.
MoonTrader TerryKinder
I can't even tell what your channel is based on.
TerryKinder MoonTrader
It is based on the low price of $339.79. It is the lowest Bitcoin price since 11-12-2013 and an important pivot point.
MoonTrader TerryKinder
Is that it? Just 1 data point? How can you draw a line with 1 data point?
TerryKinder MoonTrader
If you'd like a line could easily be drawn from the left of the price regression channel from any number of the higher prices to the low. You would then have a second data point such as it were.

The line would intersect approximately where the regression channel begins.

I really just intended this to just be another way to look at the price action and get a feel for the direction it was headed. I could have just as easily drawn a support line from the low to the current price.

Now, you could ask why I did that and my answer would be the same - it is an important price pivot from the lowest price of this year, and it is when price changed direction from the downtrend from the all time high.

Again, it isn't intended as some formal chart study to be placed in a chart textbook - it is nothing more than a way to look at the price action.

You obviously disagree with that which is fine and I'll just leave it at that.
TerryKinder MoonTrader
Alternatively I could draw something like below for a standard price channel based on the rules found here:


"Creating a Channel
Channels are relatively easy to create using these four simple steps:

Locate a relative high and a relative low in the past from which to begin the channel.
Locate another subsequent high and low that follows one of the three following patterns (see table below):
a. Ascending channel - higher high and higher low.
b. Descending channel - lower low and lower high.
c. Horizontal channel - horizontal highs and lows.
Draw two trend lines - one connecting the two highs, and one connecting the two lows. Note that these two lines should be near parallel.
These two lines form your basic channel after there are at least two contact points with the upper channel and two with the lower channel. More contact points enhance the reliability of the channel. "

This would indicate that the price is currently breaking down through the bottom of the price channel. Given the technical indicators it seems likely price will see at least a candle below the red line. In this case the bottom of the price regression channel would be one more way to see if there is any underlying support for the price or if it will continue to fall.

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