Bitcoin Price Update for September 30, 2016
Market Commentary (BTC):
As we approach the end of the week, as well as the end of September, bitcoin's price continues to stagnate in the 600 - 610 $ range much the way it has over the past few weeks. We still think that we get a breakout in one direction or the other-other the next several days, however we are less convinced of an imminent upside break given that we think there is now a greater likelihood of a washout move lower prior to our move up into the 620 - 630 $ resistance area. Despite this change to the forecast we will stay in the VST ProTrade off of the 596 $ level until the market tells us it is ready to head lower by stopping us out at the new 600 $ stoploss level. As we have said many times throughout the week, we feel pretty good about our positioning for now regardless of short term directionality.
Moving on to the technicals, we can see on the daily chart below that price is still treading water inside the large symmetrical triangle it has been trapped in for months, as well as inside the pivot area that it has been flirting with for weeks. Also note that SCMR is painting neutral candles on what continues to be a contraction of price action, and we still do not have any semblance of strong dynamic support or resistance near current levels. Adding to the confusion is a flatlined 9/18 EMA cross and a still bullish and rising 200-day SMA, both of which continue to tell the story of an extended bull market consolidation.
Getting to momentum and volume, notice that Willy is already approaching oversold territory despite the stable price, RSI is chopping around the 50-line, MACD is at its zero line, and PPO is still neutral. Additionally, trading volumes remains very anemic and volume profile is still showing some rather substantial notches, however the good ole A/D line continues to push steadily to the upside signaling buyers remain in this region.
The mixed nature of the short to medium term technicals is what is giving us pause regarding a breakout rally materializing right from these levels over the next day or two. We think a minor washout down into the 570 - 590 $ range, which is where the ST OTE long zone, triangle uptrend line, and volume profile all reside, would set the market up nicely going into October. A quick tag of this area prior to a move above 610 $ would recharge all of the indicators and would create one final touch point in the triangle formation before departing from it altogether.
As previously mentioned, despite this slight change in forecast, we want to let the market tell us whether we are right or wrong. We have raised our stop-loss level on the active VST ProTrade to the 600 $ level so that we can exit with a small gain if necessary. If not, and our original call for a weekend rally does indeed materialize, then we will already be in the trade so there will be no love lost. Regardless, our general approach of buying weakness down into the mid to high 500's $ while selling strength up into the 620 - 630 $ area remains the way to play this market in our opinion until we get clearer signs that this consolidation is truly nearing its demise.
GLGT!
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