Bitcoin Price Update for January 12, 2017
Market Commentary:
When it rains it pours, and boy has it been pouring on both bulls and bears so far in 2017. We started the year off in a fierce rally that saw price move all the way up from the 600's $ in November to a high of 1140 $ on January 4th. This was a downpour for the bears. Then we saw the market completely fall apart on news of PBOC probings of Chinese bitcoin exchanges which took price from that 1140 $ high all the way down to the 755 $ lows that were put in late yesterday afternoon. This was the storm for the bulls. Now the market is treading water near the lows as traders anticipate more news out of Asia, however the technicals are telling us that this selloff is nearing its completion regardless of any additional potential FUD we might get.
Speaking of the technicals, we want to take a look at the 12-hour and the daily charts in order to get a clearer view of what the medium term is currently trying to tell us. We can see on the 12-hour below that we now have a proper ABC correction in place that was halted by a sweep below the 200-period SMA and the upper trendline, both of which are within the OTE long zone and the intermediate term demand area. Also note that price is still above volume profile PoC, the A/D line has been surprisingly steady, all three momentum oscillators are oversold, MACD is painting a bullish divergence, and PPO is flashing strong buy signals. Conversely, SCMR is still showing red candles, there is no new dynamic support yet, and market structure and price action leave much to be desired for the time being. While there is little doubt that price is now in a confluence area that should provide some buyer support near term, if not a bottom, we still cannot rule out a slight continuation to the downside due to some lingering concerns on the daily chart below.
Moving on to said daily chart, notice that here too we are in an OTE long zone and intermediate term demand area on what are still red SCMR candles and no new dynamic support (although dynamic resistance continues to build between 915 - 920 $). Adding to the medium term uncertainty is the fact that price has yet to test the daily Ichimoku Cloud, the 200-day SMA, or the lower trendline, all of which sit between 675 and 735 $. Throw in the fact that Willy and RSI still have a bit more room to run to the downside, MACD has yet to find a bottom despite heavy declines, PPO is just now getting back to neutral, the A/D line remains elevated, and we have a very small bullish volume divergence.
All in all, none of this is telling us that a resumption of the longer term bull market uptrend should commence anytime in the near future, however all of this is indicating that downside is likely limited from current levels. While we could see a continuation down into the mid to high-600's before a regional low is put in, we would still be buyers of the move even if the market ends up in a sideways consolidation over the coming months. With that in mind, the technical damage done will take some time to heal, but it is not severe enough to jeopardize the longer term bull market that we have had working for over a year now.
GLGT!
Current BBA ProTrades:
1.) Bitcoin ProTrade - Very Short Term: No new VST ProTrades at this time due to heightened market uncertainty and poor risk/reward profiles.
2.) Bitcoin ProTrade - Short Term [UPDATED on 1/12/2017]: We will consider a LONG position on a pullback to the 730 - 750 $ area with a stop around 720 $ and an initial target of 880 $.
3.) Bitcoin ProTrade - Medium Term [UPDATED on 1/12/2017]: We will consider a LONG position on a pullback to the 670 - 690 $ area with a stop around 600 $ and an initial target of 1055 $.
4.) Bitcoin ProTrade - Long Term [ACTIVE; UPDATED on 1/10/2017]: We will stay LONG off of the 480 $ level with a stop around 550 $ and an initial target of 1450 $.
Bitstamp 12-Hour Chart:
Bitstamp Daily Chart:
