The Golden Retracement

[bitcoinBull]

$13.30 is a key support level pointed out by Enky on his Bitcoin Trading Signals blog and by S3052 on his twitter account @BitcoinAnalyst.  Both analysts recommended selling (stop-loss) if the price falls below the $13.30 area.  There was an ask wall of $50k-$75k between $13.50 and $13.75 placing downward pressure on a bid wall of $30k at $13.30, but that ask wall was just removed and price is on its way up at the moment, to the next ask wall at $14.00.

$13.30 is the point of a 61.8% corrective Fibonacci retracement or a "golden retracement", from two recent extreme price differentials.  The most recent one was the bounce from $12.50 to $14.70 on July 18-19.  14.70 - 0.62*(14.70 - 12.5) = 13.3.  Before that, there was the bounce from $11 to $16.50 on July 5-6.  16.50 - 0.62*(16.5 - 11) = 13.09 (close enough).  The correction to $12.50 after the high of $16.50 can also be considered a 76-78% Fibonacci retracement (72% to be exact).

For the moment, it appears we've (weakly) bounced from $13.30.  Now the question is: short-term retracement or trend reversal?  Chart patterns are one tool for deciding which, but my best match of the current chart is to a symmetrical triangle, starting from July 5-6.  From what I've read, breakouts from a symmetric triangle should happen before it reaches the apex.  It's the sign of an uncertain market when there is no breakout, and price continues sideways past the apex.  That seems to be the current circumstance.  The apex of the triangle starting from July 5-6 was reached in the past  few days, and price is continuing sideways right around the starting median ($13.75).

My beginner's study of technical analysis.  Comments and speculation welcome.

[istar]

It probably doesnt have anything to do with a "Fibonacci retracement" or something like that.

The price is affected by the fact that Dwolla is gone as a payment method, and how much is written about bitcoin in the media.

Its probably going to fall for a little while before recovering.

[notme]

It probably doesnt have anything to do with a "Fibonacci retracement" or something like that.

The price is affected by the fact that Dwolla is gone as a payment method, and how much is written about bitcoin in the media.

Its probably going to fall for a little while before recovering.

If the market is uncertain about Dwolla, it matches with the OP's observation:

It's the sign of an uncertain market when there is no breakout, and price continues sideways past the apex.  That seems to be the current circumstance.  The apex of the triangle starting from July 5-6 was reached in the past  few days, and price is continuing sideways right around the starting median ($13.75).

My beginner's study of technical analysis.  Comments and speculation welcome.

Reading charts can tell you what's going on without having to care why.  Of course, if someone manipulates the charts all bets are off.

[Piper67]

It probably doesnt have anything to do with a "Fibonacci retracement" or something like that.

The price is affected by the fact that Dwolla is gone as a payment method, and how much is written about bitcoin in the media.

Its probably going to fall for a little while before recovering.

Plus, it's the end of the month and people need to pay rent :-)

[evoorhees]

My frog legs and eyes of newt are clearly showing upward price movement over the next month. The dark ravens on the fence post this morning may be a counter-indicator, but I think it's safe to say the three-cloud-pattern which obscured the moon six nights ago protects against this type of reversal.

[Piper67]

My frog legs and eyes of newt are clearly showing upward price movement over the next month. The dark ravens on the fence post this morning may be a counter-indicator, but I think it's safe to say the three-cloud-pattern which obscured the moon six nights ago protects against this type of reversal.

Time to go to the basement and consult with my monkey and his ouija board. 

[datguywhowanders]

My frog legs and eyes of newt are clearly showing upward price movement over the next month. The dark ravens on the fence post this morning may be a counter-indicator, but I think it's safe to say the three-cloud-pattern which obscured the moon six nights ago protects against this type of reversal.

Time to go to the basement and consult with my monkey and his ouija board. 

Why is it I feel like this is exactly what I do every time I buy or sell?

[Oldminer]

Why is it I feel like this is exactly what I do every time I buy or sell?

Its hard to make profits using tried and tested methods such as analytics when the markets flat like Bitcoin has been these last few weeks. A Ouija boards gonna give you just as much success. So will tossing a coin.

[bitcoinBull]

How about this for some chart voodoo.

If price bottoms in the high elevens ($11.14-$11.90) before going back up, it would form a nice-enough "classic" ABCD bullish reversal pattern.  The stronger the volume at the reversal, the better.

The down leg (AB) is from point $16.50 on July 6th, to $12.50 on July 18th (12 days).  The retracement leg (BC) was from $12.50 to $14.70 on the 25th (7 days) and was a ($2.20/$4.00) = 55% retracement, close enough to 62%.  For the gentler "classic" pattern (bullish), the third leg CD is drop of 127% or 161.8% (of BC), or (1.27x$2.20) = $11.90 or $11.14.  I especially like this pricepoint because the price over difficulty ratio here coincides with the historic low set during the drop to $0.59 in early April.

The bullish "extension" pattern is more brutal, a 127% or 161.8% (of AB) drop.  

An additional confirmation is that the third leg (and last drop) before the reversal at point D takes a time T anywhere from 61.8% to 100% to 161.8% of the time AB (12 days) - so between 7.5 days to 19.5 days from point C the 25th.  So the earliest date would be August 1st-2nd and latest would be the 13th or 14th, if it matches to this pattern.

We kind of need a reversal soonish, to stay in the medium-term growth channel.  A sustained fall into the single digits (satoshi forbid) would start forming a head and shoulders pattern.

[istar]

How about this for some chart voodoo.

If price bottoms in the high elevens ($11.14-$11.90) before going back up, it would form a nice-enough "classic" ABCD bullish reversal pattern.  The stronger the volume at the reversal, the better.

The down leg (AB) is from point $16.50 on July 6th, to $12.50 on July 18th (12 days).  The retracement leg (BC) was from $12.50 to $14.70 on the 25th (7 days) and was a ($2.20/$4.00) = 55% retracement, close enough to 62%.  For the gentler "classic" pattern (bullish), the third leg CD is drop of 127% or 161.8% (of BC), or (1.27x$2.20) = $11.90 or $11.14.  I especially like this pricepoint because the price over difficulty ratio here coincides with the historic low set during the drop to $0.59 in early April.

The bullish "extension" pattern is more brutal, a 127% or 161.8% (of AB) drop. 

An additional confirmation is that the third leg (and last drop) before the reversal at point D takes a time T anywhere from 61.8% to 100% to 161.8% of the time AB (12 days) - so between 7.5 days to 19.5 days from point C the 25th.  So the earliest date would be August 1st-2nd and latest would be the 13th or 14th, if it matches to this pattern.

We kind of need a reversal soonish, to stay in the medium-term growth channel.  A sustained fall into the single digits (satoshi forbid) would start forming a head and shoulders pattern.

Nice!

Or its just that on the 2nd of august, the faith in the dollar will plummet and thus make people invest more in bitcoins...

[Grinder]

Or someone saw these analysis and thought "great, I could use some cheap bitcoins", so they sold enough to force the price below the predicted level.