BITCOIN ALERT – Tuesday 15th August 2017
BITCOIN (USD) – A BUBBLE ABOUT TO BURST?
Overview – It is almost impossible to make rational and reasoned forecasts for Bitcoin such has been the remarkable price development that has occured so far in 2017. Equally, though many have offered explinations for the crypto currency phenomena none of them really stand up to closer examination. Though we believe the crypto currency is here to stay the current price development looks increasingly like a bubble that is about to pop and pop hard!
Chart 1 – Bitcoin from inception in 2009 showing possible wave I peak in January 2013.
The above chart (Chart 1) shows Bitcoins dramatic rise and equally dramatic decline over a period of two years (2013 – 2015). We are assuming that this can be labelled as a Major Cycle Wave I and that the subsequent decline over the period of a year was Major Cycle Wave II.
Since the lows of January 2015 when Bitcoin traded briefly at $167 we have witnessed a price increase that at current prices shows a rise of over 2,500%. This move higher we believe will ultimately be labelled Major Cycle Wave III. It is not possible to give accurate Fibonacci projections for the termination of this wave such has been its magnitude. But we believe the top is very close at hand.
Chart 2 – Key Turning Point Analysis (Logarithmic Scale)
The above chart (Chart 2) show the Key Turning Point Analysis since the beginning of 2017. Bitcoin may be a new asset class but it functions in exactly the same way as any other freely traded market. The asset has not been in existance long enough for us to undertake detailed historical analysis and back-testing but there is nothing to suggest that it wil not follow the same ‘Time Cycle’ principles that all other markets follow.
Long Term KTPA – KTP14 is due right now mid-August and must arrive with medium time frame KTP4 or KTP6.
Medium Term KTPA – The labelling of KTP4 and KTP5 is not ideal and it may be that KTP4 is very late, in which case the major top we are expecting will arrive by the end of August. If this is the case it sets up for a very volitile decline into the KTP7 or KTP9 low which will most likely coincide with the long term KTP15 low due in mid-October.
Short Term KTPA – KTP4 is late but may have arrived today in which case we will see a modest decline over the coming days as the market seeks out KTP5 due on Monday 21st August (modest is relative with Bitcoin). This would then set up a final move higher into KTP6 due on the 31st August.
Chart 3 – Elliott Wave Analysis (Daily Chart) (Logarithmic Scale)
The above chart (Chart 3) shows the possible Elliott Wave Labelling for the price development in 2017. It is not perfect because several questions remain answered about the price action from the 2015 lows. However the pattern is clear the Fibonacci projections and retracements are text-book and we have a classic wave V gapping-up pattern in play.
We have seen prices gap above the wave III high that was obvious resistance (Breakaway Gap), a further gap up in the middle of the wave (Continuation Gap) and all that is required now is one final gap higher to complete the pattern (Exhaustion Gap).
We have a measured Fibonacci projection that suggests this entire five wave advance may end within the price range $4,950 – $5,200.
Conclusion – Nothing is certain with Bitcoin but everything is in place for a major correction that will take many people by complete surprise, particularly the retail investor who always joins the party too late!
If this analysis is correct Bitcoin will then embark upon Major Cycle Wave IV, taking prices eventually down towards the $1,800 level. Thereafter Wave IV should last at least a year with prices moving in a huge range between the $1,800 lows and the $5,000 highs.
Eventually Major Cycle Wave V will unfold and it’s anyones guess where that might take prices!
TRADING OPPORTUNITIES – It takes a brave person to trade Bitcoin, the attraction is obvious and for most of 2017 it has been a one way bet, but we think that is about to change dramatically.
As part of the new launch of TradersDaily.co.uk we will be covering Bitcoin regularly and in some detail.