Originally published in the Bitcoin BullBear BTC/USD short term update issued on 2/10/2014.
General Market Commentary:
**Today we say farewell and good riddance to Mt. Gox as an exchange worth covering in our analysis. Bitstamp will now be the primary exchange for Bitcoin BullBear BTC/USD market coverage.**
There is little doubt that the past five days has tested the bitcoin community, as well as investors’ patience and fortitude. Mt. Gox has singlehandedly damaged the exchange ecosystem by scapegoating an already known protocol inconsistency, most likely for their own gain (or survival).
Although it is somewhat troubling that transaction malleability is possible using third party providers, it is a problem with a solution and is fairly low on the list of bitcoin protocol fixes that demand immediate developer attention. This is due to the fact that third parties can solve the issue on their own by implementing operational/procedural changes which eliminate the possibility of malleability. Regardless, the market is acting much as we thought it would (with the exception of the panic spike) and continues to trade within the patterns we have been discussing over the past few weeks.
Market Update:
We show the updated 2day log chart below for the longer term perspective. You can see that the symmetrical triangle is still intact which would support Option #1, however this could change in an instant given the longer timeframe candles. Until the current candle is completed having still held the 530 $ low, there is added downside risk. On that note, however, if this candle does indeed paint as it appears on the chart right now, it would be a nice looking bullish hammer candle which would lead the market back up to the top of the triangle, at least.
The indicators are showing a more bullish picture in the medium to long term despite the recent weakness, but the technicals have definitely sustained some damage. On the bright side, the 50 and 100day EMA’s are still bullish and the market bounced right off of the 100day earlier today, the Williams %R is gaining a little more strength off of the oversold bottom, and the triangle remains intact. Conversely, the Parabolic SAR has flipped to bearish, the RSI is trending down and is not oversold, and the MACD has turned lower.
Put all of this together and we continue to believe the market is still in a longer term bull market unless the 260 $ low is broken on a confirmation, however the short term weakness looks like it will persist for the time being. Key levels are 530 $, 377 $, and 260 $ to the downside, and 700 $, 800 $, and 995 $ to the upside.
BTC/USD 2day log chart on February 10, 2014:
For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, Nasdaq 100, DAX 30) please visit Digital Currency Research. Happy trading!