Bears Running Out Of Rope? | $BTC USD #bitcoin #litecoin $Gold

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
2864 35 15

If you have followed the predictive analyses and forecasting for this crypto-currency, then you received the most recent bearish target, with a floor defined at 408.87 - Here are a few for your review:

1 - Following significant rally, a low 554.65 target is defined (29 days ago)

2 - Bearcoins are back (6 days ago)

3 - Defining BEARISH supports (3 days ago)

Now that we are coming to the very last of the support defined by my predictive analysis and forecasting system, one has to raise several questions. First, with a doubting overtone:

How do we know that we are at the end of the rope?

The simple answer is that we don't. The system offers signals, and it is up to the individual trader to look back at the information that has come out of it and that I posted to see whether there is any real reason to doubt a system that has been quite on the money so far.

Assuming that you have residual doubt, then let's look at some technical events of late.


Taking a look at the WEEKLY chart above, there is little doubt as to the existence of a long-term trendline that has offered its support three times so far, and is now building the anticipation of a fourth one.

The triple bottom that we are about to witness happens to also define a potential 3-Drives pattern. The purist would disagree with the implied Wolfe Waves Pattern expressed through the 2-4 Target Line, however, I will leave it there, because as a non-pattern trader (at least not as a principle mode of trading), I have had quite a lot of reasons to build respect for this 3-Drives/Wolfe Waves hybrid organism.

Another pattern to consider in the background, defined by the X-A-B-C-D is a Butterfly , with a Point-D projecting to a 1.272 x XA, and lining perfectly its 1.618 x AB into a surgically equal PRZ @ 1374.16.

A reverse engineered rally into a speculative 2-4 Line might be quite a stretch, but again, all my targets were considered worse than that if you followed my earlier analysis. So, I won't feel to ridiculed here either.


At this point, I caution the bear, as the ultimate low target is nearing. Given the 400.00 historical structure-low, price action closing below that level should invigorate the bears and scare the bulls. But until then, I would encourage bears to keep an open mind about the potential reversal at the levels defined above. This is not a question of being right or wrong, but of remaining with the market.

The market has defined a long-term trendline to cushion the current decline into a potential reversal level that falls squarely with the forecast value of my system @ 408.87. While that value was qualified as low-probability of being attained, price is nonetheless reaching the market's gentle trendline support at or near that value.

The directional tag is now moved from short to neutral until these price/trendline interaction solidify a support.


David Alcindor
Predictive Analysis and Forecasting

- Remember to remain dubious about every and any thing I say. All comments are subjective perceptions based on unshared, proprietary and common knowledge of fundamental analysis , classic technical analysis , basic and advanced pattern trading, as well as personal research in occult market geometries, predictive analysis and quant-based forecasting, some or none of which is being shared in my trading profiles, so do your due diligence and review the disclaimer below.
- Forecasts, analyses and directional opinions generated herein are for educational purposes only and are not trading recommendations. We trust that you will do your own due diligence first, then seek professional advice from a licensed professional, then enter the market at your own perils - David Alcindor - TradingView.com Alias: 4xForecaster
David Alcindor, CMT Affiliate #227974
Alias: 4xForecaster (Twitter, LinkedIn, StockTwits)

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20 MAY 2014 - update:

In order to remain objective, I have offered several analyses using different timeframes, different charts, and different comments - See the following for the most recent analysis on Bitcoin:

1 - BTCUSD/bitstamp - H4 Chart/Analysis:
"#Bitcoin Consolidation: Recoiling Before Springing? | $BTC #LTC"

2 - BTCUSD/Bitstamp - H4 Chart/Analysis:
"Hit Target Dead-On ... Consolidates | $BTC $USD #bitcoin #forex"

I am not sure where I placed the charts that provided monthly/weekly views of the "Growth Trendline" concept, but suffices to say that this concept was proven right with BTCUSD/MtGox, which attained its baseline level and was able to rally from that level. Point here is that exchanges are lining up behind bulls, and the technical outlook remains further supportive of a sustainable rally.


David Alcindor
Predictive Analysis & Forecasting

Now that we are at sub-bearmost target levels, and still carving out now lows. more bearish news is raining on the cryptos, indicating that "China's Bitcoin exchanges say banks will close their accounts" (see news here: bloom.bg/1qm30TB).

So, where does it leave us?

If you were part of the debate that opened in this thread last week, you would perhaps take heart at the fact that there is no immediate needs to run for cover, and in fact to rejoice if you are among the short sellers. If you are long, at least find solace in the rationalization that if this in fact was a bubble and that it is in fact bursting, then there is a definable ground waiting to soft your 1,000 meter jump. Besides a couple of fractured ankles, a bruised ego and a traumatized sense of confidence in a rigged market, one should console with the simple physics fact that gravity still works. ... And this is to contrast with the other larger financial markets where up is down, black is white and that the US market is not in a bubble, per reassuring words of the paper-printing talking heads at the Fed. Feel better?

Didn't think so.

Still, please see comments and exchanges left above regarding the probable direction, path and projected level of this falling knife. You are welcome to attempt to grab it, but it might pull you with it.

Looking at the chart itself ...:


..., note that I have highlighted with arrows the probable levels of support which might bring temporary support, even though the theory that bursting bubbles return to their original baseline growth trendline still supports the fact that price is most probably going to continue its downward course until a valuation is normalized to its trendline.

Per the chart, a depth of normalization is expected between 335 and 150 (I would seek the lower end here), whereas a breath of normalization over time will probably support price at or above the 150 level.

Again, there is a lot of fundamental event weighing on this falling asset, and gravity is doing its natural job here. In other words: Down is down.


David Alcindor
I don't think so. If we reverse at $335, then we'll confirm the long-term trend channel:
Jameve 4xForecaster
The next VERY strong support level should be ~$260 (April ATH) hard to believe it will go past that otherwise bitcoin is bear forever
Crypto currencies are 21st Century economics. They will adapt and integrate into our global markets system! Change is volatile and difficult, but always necessary!! Just my view on this!! :-) Intersting thing, if price goes down to $200, it may still rise up at Point-5', and take off, just when everyone has finally written it off!! lol :-)
I have NOT looked at any refined bearish scenario, as my system has continued to point the levels above as being solid bases from which a significant support exists. So, again, until 400.00 is violated AND the system churns out new levels below that, I won't have much to report.

Nonetheless, it is still worth discussing what @Technician is proposing in terms of value. In a recent report from Harry S. Dent, Jr., who claims to have studied all of the major world market bubbles across centuries, one of his starkest observation is that ALL bubble-bursting markets return to AT LEAST the normal growth trendline that dominates across time, if not lower. He had that this has been true of ALL markets, all countries, all ages without any exception.

So, looking at Bitcoin from this point of view, here is what I was able to draw:


What the chart demonstrates is BTCUSD through the Bitstamp exchange, highlighting first the supportive trendline that has carried price up to its major bubbling valuation.

Now, extrapolating on the current rate of devaluation, the extension of the declining channel, directed at the price current rate of change since its apex, brings Bitcoin towards that normalizing trendline at a value ranging between 130 and 150.

Added in it are parallels of that baseline growth trendline, stacked upwards to justify against the initial burst, which helps offer an upward bracket of the initial growth, carried forward, yielding a range of 150 to 335.

Hence, assuming that 400 breaks, and that price continues its controlled downward course to normalization of its value, then it would not be much of an exaggeration to speculate an average value of about 242.50 MAXIMAL valuation against a BOTTOM value near 150.

It will be interesting to see what comes out of the system compared to this theory-based true valuation of a normalizing asset, following a post-bubble-bursting unwinding.


David Alcindor
Technician PRO 4xForecaster
Great Point, I totally agree on this rational assumption, going back the Norm.
ClearView Technician
It all depends on how you define 'norm'. Before the November bubble, the only bubble on the chart was last years' April bubble. That bubble *never* returned to the mean as defined by the slow and steady climb leading up to it from the 2011 bubble. So, will BTC:

1) Return to the *original* mean as defined by a trendline leading up to last year's bubble? This would be far lower than 100.
2) Return to the mean defined on 4xForecaster's chart above? If so, then the rule of 'always returning to the mean' is broken in the case of the April bubble.
3) Or, is last April not considered a bubble, as it is dwarfed by the recent $1200 behemoth? If so, who's to say that there won't be another that dwarfs the November bubble?

The IRS (and China/Russia's) rules are a wet blanket for the time being, but Bitcoin's utility reaches far beyond currency-like transactions in the United States. Those who waited for a 'return to the (~$30) mean' after last year's bubble were disappointed. If the same pattern plays out, $400 could prove a solid bottom before another run up. However, all patterns are bound to be broken sometime, hence the current discussion.

Anyway, many thanks to 4xForecaster for posting these charts and analyses that I very much enjoy, and Technician for your point of view. :)
@ClearView - Thank you. I see your point about the continued amplification of the value over time. So, may be it will simply shrink back into a sucking blackhole vortex and take us all in with it. Who knows. Still, I appreciate every chance I have to analyze these problems, and I very much appreciate your kind feedback.


David Alcindor
BuyOnPurple PRO 4xForecaster

I agree that a return to a baseline growth trend might be in the works. But as clearview partially pointed out below, this can mean quite a few things. Here's my suggestion: take it for fact, bullish or bearish, that IF bitcoin is going to continue to grow along some mean, it will do so as almost all other infant technology networks -- in a logarithmic fashion. With that in mind, here's what I see as a potential correction to the mean:
Note the green vs. yellow diagonal lines. Also note that in the next few months, my yellow logarithmic trend, which was developed from much lower prices and much less aggressive expansion move than the baseline you extrapolated, is actually a lower support than what you've offered -- our lines meet up at the beginning of November (ANOTHER November rally?! Just kidding) and mine dominates from there on out -- but still with a wholly reasonable growth target where this yellow line doesn't hit $1000 until late 2016.
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