BTC Update Tuesday 4 March

G'day!

Well, that was a nice little pop[, right?!  You will recall that we advised a BUY on a strong close of the candle that pierced descending resistance.  Let's review what happened next on a chart...

So, focusing on the green circle, you can see that we got the candle close we were looking for, signalling the BUY trade we advised.  What happens next kinda speaks for itself, with the market popping up over 20% to retest the resistance we had identified at $710 (BitStamp), within the next 12 hours.

As suspected, the selling pressure at this confluence of key resistance has been sufficiently strong to snuff out the rally for the time being, and it wouldn't surprise us to see a consolidation back to the $640-620 area before sufficient new buyers jump back in to reverse the order flow back to the North.

Should this occur the market is likely to encounter far less resistance from $710 at the second time of asking and if we get through at the second ask, the top of the previous trend channel, currently at around $760, is a realistic target.

Having said this, its very early days for this nascent short term trend reversal and it is entirely possible that the market will trade back lower than $640 (and perhaps as low as $550, again) before sufficient new buyers are encouraged back in.

Whatever the immediate future holds, what we have witnessed is a pretty powerful counter-trend spike which, if nothing else, signals a renewed willingness from some to buy back into the market.

So, how does one play it from here? Well, active traders who took our advice 24 hours back will already be flat again, having taken profit at the resistance we identified.  Personally, we'd want to see a nice powerful reversal at $640 to hop back into the market long, this side of a rally through $710.

But that's just us.  Having taken the easy money its sensible to trade cautiously until the market sends us further confirmation that its recent reversal is over.

In any case, we are watching this market very closely again and we shall keep you informed.

Rob@BitScan.

BTC Update Monday 3 March

G'day,

It's been a while hasn't it.  But then it's been a while since the bitcoin market has been moving in a way that I felt was susceptible to rational analysis, which is why I have stayed off the wire.

Anyway, today - in fact, right now - there are reasons for cautious optimism even if the fundamental driver for this optimism is likely to be the (very) worrying events in Ukraine and the market's expectation that the deteriorating situation - and the capital controls that have accompanied it - are likely to be bullish for bitcoin.

Nevertheless, and putting broader concerns to one side, let's review a chart which will hopefully show you what I mean.

The first thing you will note is that the short term downtrend steepened throughout February within an ever broadening channel, which I have attempted to bound with the diagonal lines.

You will also note that with the exception of the day Mt Gox's insolvency was announced, the market has observed support (on BitStamp) of around $535.

Finally, I want to draw your attention to the most recent bar which for the first time in over a month, is trying to break out to the upside of the trend channel.

Now, while this bar is yet to close, if we are still trading at or North of the upper limit of the trend channel resistance line (shown in red) when it does, a surge to $620 is very likely and if we can trade through this - perhaps having leant briefly back against it as support - the way is clear for a rally to $710, which is currently co-incident with longer term sloping resistance.

It bares saying that should the current bar get reversed - and this is a distinct possibility - the market may well view it as yet another fake-out and pile back in to the short size.  In this scenario the resulting sell-off is likely to pierce $535 conclusively and if this goes, the market will look further South still towards the recent climactic low.

So, what to do?  Well, this is one of the few scenarios in which I would be prepared to buy strength.  By this I mean that if the current bar closes nicely above channel resistance - and at or near the upper extent of the bar's range - I would to buy the close with an expectation of further upside gains.

Nothing is a certainty in this game but when the technicals and fundamentals line up like this, I always think that it's worth a punt.

Rob @ BitScan

BTC Update Monday 10 February

G'day Peeps!

It's hard to escape the conclusion that bitcoin has taken something of a battering over the last few weeks. Ultimately the Shrem arrest, situation in Russia and Mt Gox melt-down proved too much for market confidence and price has taken a bit of a tumble.

From a technical perspective, the rules never change as this young market proves as susceptible to the laws of support and resistance as any I have ever traded.

Let's pull up a chart to review the situation and you'll see what I mean:

In our last post we stated that a concerted move down through $765 (BitStamp) would result in a retest of channel support at around $710.  In the event this is exactly what happened and since then you can see just how significant this price point has become as price pivots around it.

The bad news is that the last attempt to drive back above it and into the channel was successfully countered and at the time of writing, resistance sits above the market like a big black cloud.  Based on what we see here the most probable scenario is further drive South to retest the downside limit of the recent plunge at $620.

However, should this occur the market will be confronted by a powerful co-incidence of horizontal and rising support.

As you can see from this Daily price chart, the $550-620 area of horizontal support is co-incident with a rising support line drawn against the low-side extremes of price since this correction began.  While we cannot be sure that they will hold if and when tested, we can say that active short profits will be booked here in anticipation of the buying counter-attack that the market anticipates will be lying in wait. Often this turns out to be a self-fulfilling prophecy and for that reason, this support area represents an excellent place to pick up bitcoin for those with the stomach for it, as it represents an extreme boundary of the existing condition.

In the meantime, worried bitcoin bulls will be hoping for a rally from where we currently sit and this isn't out of the question.  While $720 has been rejected once in the last 24 hours the market hasn't fallen far as a result and if it does manage to break back and hold above $720 within the next 24, a retest of $765 as resistance is likely and if this gives the market will target the far side of it's old descending channel, currently at around $800.

So, as ever, bitcoin lives through interesting times.  Under attack from all angles its valuation is currently under pressure but looked at another way its resilience is simply amazing.  If you asked any Fortune 500 CEO whether they would accept a 20% drop in their share price in exchange for coincident news of the closure of all their outlets in major country, the loss of a global primary sales channel and the incarceration of one of their highest profile board members, they would bite your hand off.

Bitcoin really is the honey badger and we shall be buying more at $620 if we get the chance.

See you there...

Rob @ BitScan

BTC Update Tuesday 5th February

G'day Peeps!

Regular followers of BitScan's market analysis will have noted that we haven't posted for over a week.

There are two reasons for this.  The first is that since the market hasn't moved, there really hasn't been an awful lot to say.  The second is that we have been reconsidering the best prism through which to view the market.  The conclusion we have come to is that with daily volume at BitStamp closing in to meet that of MtGox, coupled with the mounting uncertainty swirling around the viability of MtGox moving forward, convince us that now is the right moment to shift our commentary from one to the other.

So, until further notice all our analysis will focus on the BitStamp market.  We appreciate that some of you have been asking for this for some time.  Hopefully this will serve as proof that we do listen to our clients.

With that said, lets get to work and look at a chart:

What we can clearly see here is that the market continues to consolidate within the boundaries of a gently downward sloping - and well defined - channel.

As we drift sideways in the vicinity up the upper boundary of this channel, there really isn't a lot for any of us to do.  This wouldn't be a good place for active traders to BUY, as downward sloping resistance is close-to and risk of a downside surge against it remain significant.

Active traders could, of course, consider selling here but before doing so, they should bear in mind that the overall context remains UP.

So, what can we say?  Well, on the one hand, should the market surge North to beyond the upper resistance boundary, a momentum move to $845 is highly probable. Should this occur it may well set up a sound BUY opportunity on a rejection of $845 as support.  We'll certainly be watching for that.

On the other hand, should the market fail to breach channel resistance soon, $765 will once again hove into view and if this gets pierced on building momentum, $710 is likely to get tested as support.

And that's about it for the moment.  Except to say that from an investment perspective, consolidation at or near the highs of the most recent Up leg is a strong indicator of continuation - and that's good news for all of us - right?!

Cheerio for now,

Rob @ BitScan

BTC Update 26 January

G'day People!

I've always believed in owning up to your mistakes and yesterday we made one.  While we suggested that the market might turn at $920 (Gox), we also made it clear that we considered a fall back to $835 far more likely. As a consequence of that bias we cautioned against buying at $920.

Well, 24 hours is a long time in any market, especially bitcoin, and price movement since that last post has proven us wrong.  In the event the market did turn at $920 and had you ignored our advice you'd now be sitting on a profit of around $40 a bitcoin.

Anyway, this latest price movement is significant so let us stop dwelling on the past and have a good look at what has happened and what it could mean moving forward.

Here's the chart:

Homing in on the right hand edge of the chart, we can see that in bursting back to the North the market is re-testing the top of the recent range.  We can also see that having put in a new swing point this move has generated a new rising support line (green upward sloping).  Most significantly, however, is the fact that the move pierced and is currently holding above 2 sloping resistance lines (green downward sloping).  What this all adds up to is a formidable band of support, between $920 and $960, against which new buyers will be entering the market - if they are even tested.  This is a pretty bullish sign and the fact that it exists may well tempt momentum traders back into positions, further feeding the rally.

As regular readers know we had been anticipating a context shift from trend to range.  As of now that view is on notice and based on what we have seen over the last 24 hours, we now feel it more likely that the market will find the momentum to reach up to $1000 at least, which is good news for active traders and investors alike.

Below price, we just need to watch that the market doesn't reverse to below $920 as clearly this would indicate yet another fake-out.

As a final note, anyone still reading this post through blogspot needs to be aware that as of tomorrow, we will be shutting down this service and publishing through the bitscan.com website only. See you all there!

Rob @ BitScan

BTC Update 24-25 January

Hello Peeps!

The eagle eyed among you will have noticed that this chart is little changed from our last post.  You will also recall our suspicion that the market was transitioning from trend to range mode and that the most likely scenario in that case, was a failure to breach its top, at $960 Gox, and a subsequent retracement back into the range.

Let's have a look at the chart:

What we see here is classic range behavior.  When price moves to within the influence zone of a key price point momentum suddenly builds as everyone climbs onto a move that is quickly becoming a racing certainty.  But when that key price point is tagged momentum just as suddenly evaporates and late entrants wonder what the hell happened.  Well, what happened is that all the smart money booked profit because they realized that the easy profits were off the table.

This is why we have seen the market mark time ever since $960 was hit and more recently, momentum build in the other direction.

As it stands price is hovering around the inflection point at $920.  If this gives we will likely see downside momentum build as active traders target the bottom of the range, at $860 or possibly $835 beyond it.

If and when this triggers, the sudden burst of momentum will again be pronounced but when we get there, the wall of support, coupled by active trading money coming back off the table, should once again stop the movement in it's tracks, and after a period of stagnation the cycle will set itself up for a repeat.

This is the nature of ranges.  They are infuriating for momentum traders but for those with the savvy and bravery to trade from their limits, they can be very profitable.

Having said this there's always a possibility that the market will look back to the North from where we currently sit - and if it does this will be bullish - but in our view the probability of this occurring is not sufficiently strong to make it trade worthy.

So, for the moment our intention is to keep an eye on things, sit on our hands and ponder a further BUY trade at the bottom of the range.

Investors - as you were. It's all cool.

Rob @ BitScan

BTC Update 20 January

G'day Peeps,

Well, having stated in our last post that bitcoin's ongoing consolidation might march on for some time, I guess I was asking for the rally that has followed.  Let's look at it on a chart:

As you will rapidly note, that rally has carried the market back up to re-test resistance at $960 (Gox), where we have been stalled for the last 12 hours.

What does this mean?

Well, we don't know yet.  In our last post I advised that this would be a good point in price for active traders of bitcoin to take profit - and I stand by this advice - BUT, as we look at the chart right now it would be hard to deny that the market is shaping to break through this key price point and if it succeeds the way is clear to $1020 and who knows what happens then.

Having said this we are not conclusively through this level yet and if the buying dries up, momentum will quickly swing in the opposite direction.

And what this serves to remind us is that this market - just like any other - wants to continue doing what it was doing before.  What I mean by this is that the longer a market trends, the harder is to shake that trend - as a direct function as the amount of skin that's in the game.  Similarly, the longer a market ranges, the more it wants to continue ranging - as a direct result of the amount of skin in that game.

So, we've watched the bitcoin market transition from trend to range.  The range is young but it's perceptible.   We don't know yet if this range will become another flag on bitcoin's irrepressible journey North or - perhaps more importantly - when  it might give.  All we can say for the time being is that bitcoin is testing the upper limit of its range,

What should we do?

Well, the one thing we shouldn't do is buy here.  Buying here would not represent a value purchase.  We are well above the key support level of $750 - where BitScan advised a BUY.  This isn't to predict that bitcoin will definitely stall here, only that it might; based on the fact that markets struggle to change their condition and that bitcoin's current condition is a nascent range.

This, of course, will mean little to investors, nor should it as they have time on their side.  Investors can afford to wait out the 'noise' and wait for the big moves - and on this point, nothing we see here indicates a major reversal.

That's all we have for now.  Stay tuned...

Rob @ BitScan

BTC Update 19 January

G'day Peeps and Happy Weekend!

So, it's been a very quiet week for bitcoin as the market continues to consolidate.  In our last post we highlighted the fact that the resistance zone up at around $960 (Gox) would be a tough nut to crack and this has proven to the case.

Let's have a closer look using a chart:

As you can see, the resistance zone (re-numbered 1 on this chart) did hold and this confirmed the presence of a downward sloping resistance line.  However, see also that the sell-off this triggered was reversed (at point 2) inside the $835 level that has been so significant in the past.

When considered together, we can't help feeling that the wedge formation transcribed across recent highs and lows is starting to look pretty long in the tooth. Both buyers and sellers have tried on multiple occasions to drive the market through its limits (to gain supremacy) but neither have been able to do so.

In the absence of a change in the fundamental (underlying) picture, we consider it most likely that the market will simply continue to trade sideways in the short term, with the $860-830 zone as support (and a rational place for active traders to enter long) and $960 as resistance (and a rational place for active traders to book profit).

Given that the long term trend remains UP we would not countenance establishing or advising a net short position (only buying at support and booking profit at resistance) but we are equally clear that a plunge below $835 would change the short term outlook, sending us back down to $750 in all probability, and potentially lower still.

In the meantime, however, bitcoin looks more and more like a market establishing a range, within the overall context of an up-trend.  This situation might last a day, a week or months and for active traders it presents an excellent opportunity to swing trade (between support and resistance).  Investors, on the other hand, need only to sit on their hands :-)

And that's all we have for now.  Enjoy what remains of your weekends and we'll report back as the new week unfolds.

Rob @ BitScan

LTC Update 15 January

G'day Guys,

Since bitcoin still seems to be making up its mind ( but watch for a reaction @ $960 (Gox)), I thought we'd take the opportunity to look across at Litecoin.

Let's start with a chart:

As you can see, like bitcoin, we've traded sideways out of what looked like a nicely re-building uptrend. And while price hasn't actually moved that far (in real terms) the technical picture has weakened somewhat.  Essentially, this sideways slide presents 2 opportunities against which sellers might launch a bearish counter-attack.  The first is at $24.65 (point One) and the second is at around $26 (point 2).

Having said this price has, broadly, managed to stay within the limits of the long term uptrend and near term momentum looks to building again, so there remains every chance that this market will carve back up through resistance at a moment of its choosing.

And if this analysis sounds somewhat diffident its because directionality across all the main crypto-currency markets is weak.  It would be foolish and counter-productive to draw emphatic conclusions when they are not supported by the current mood of the market, or the price action which that mood drives.

However, if I have learnt anything over the last 10 years trading it is that markets tend to make their most significant moves just as everyone watching them starts to fall asleep.  The second thing I have learnt is that quiet markets offer the best opportunities for breakout - or momentum - entries.  With this in mind, if LTC does suddenly steam back through $26 on real energy, you might consider a small momentum punt Long, if you aren't already in the market.

Just Sayin'

Rob @ BitScan

BTC Update 14 January

G'day Peeps,

So, the time being, bitcoin's pull-back was arrested at the first of the the rallying points we highlighted in our last post.

Here's how it looks on a chart:

To re-cap, having broken through resistance at point One, the market failed to follow-through and this provoked the break back through old resistance as support at point 2.  The market has subsequently rallied from point 3, which was the nearest support level of the 3 potential scenarios we highlighted in our last update.

The big question from here is what happens if and when the market gets to point 4.  We need to be clear that it's going to face still resistance at $960 (Gox) and North from those intent on loading up on their shorts, fearful bulls who don't want to push their luck and anyone else who needs to liquidate back to fiat and has identified this price point as the best the market is likely to offer them in the short term.  If you fall into this latter group you should take heed and make your plans.

Having said this, should the market manage to shirk off this wave of selling and power straight back into its former trend channel, it will represent a hugely bullish indicator of market strength in the short term.  Seeing this a good few bears will, once again, lose their confidence and close their positions, which will in-turn feed the positive order flow.

Finally, it needs saying that if the market reverses before we even reach $960 resistance, it is unlikely that the shallow rising support line (against which point 3 was indicated) will hold at the next test and in this scenario $835 is a racing certainty.

And that's all there is to say for the time being.  Except to add that if any of you are interested in actively trading bitcoin, with bitcoin, you could do far worse than check out btc.sx.  Its an excellent platform, you can create an account in seconds and the CEO is renowned for his absolute integrity.

And with that thought we shall leave you, but do keep an eye on things as we are yet to reach the conclusion of this latest latest act in the play that is bitcoin.

Rob @ BitScan 

BTC Update 13 January

G'day Peeps.

Not such a smiley day for bitcoin bulls as the breakout we reported in our last post failed to follow through.

Let's have a look at it on the chart:

The figure One marks the initial breakout and at this stage everything looked good, but when the follow through buying didn't materialize  the market did what came naturally and looked back at $960 (Gox) to retest previous resistance as support.  This happens at point 2 but when insufficient buyers come in at this level, we go through it in the other direction.

This has dealt a meaningful blow to the recent bullish complex, leaving in its wake a significant barrier of resistance (red elipse) above the market, even if we should rally from here.

Below the market points 3, 4 and 5 indicate the price points where sufficient buying power may emerge to reverse the current bearish order flow.

For active traders this is obviously something of a blow.  Those that bought on our last BUY advice at around $920 (Gox) should either already be out at break even or thinking seriously about getting flat.  Those that bought earlier on our BUY advice at $750(Gox) also need to be paying attention.

With respect to what next it is difficult to recommend a BUY at $835 (Gox) on the basis that we just made a lower high, meaning that sellers emerged at a lower price with sufficient power to reverse the order flow.

As ever, investors can afford to be more sanguine but regardless, the situation for bitcoin looks significantly less rosy, in the short term at least, than it did just 48 hours ago.

Hey Ho; this is the way it goes sometimes.  We can only trade the levels, based on what we see.  At the time of our last post all the lights looked green, but with the break back down through $960, we need to be clear that they switched back to amber.

Watch this space...

Rob @ BitScan

LTC Update 12 January

G'day!

With BTC pushing up nicely following our recent BUY recommendation, let's have a look across at Litecoin to see how this market is faring.

As ever, we'll start with a chart:

In our first look at LTC, back on 5-6 January we identified $27.90 (Gox) (and $31.35 beyond it) as key resistance moving forward, and $21.46 as key support below the market.

Incredibly, within 24 hours of submitting this post the market had tested all three of these key levels. This means that had you followed our advice and sold at $27.90, then bought back at $21.46, you'd currently be sitting on a tidy profit of $4.50 per coin having endured no 'heat' whatsoever.  Not bad ;-)

Also, do you see how the the confluence of horizontal and rising support combined to arrest Litecoin's fall?  This tells us that the smart money was waiting for this correction to start accumulating more coin - and it is a very bullish indicator.

Since then, buyers look to have continued accumulating against rising support and as a result we're now trading back above the short term inflection point of $24.65; another bullish indication.

While it wouldn't surprise us to see LTC dip back to re-test @24.65 as support, every indication is that we are firmly established in a renewed rally which has the potential to re-test $27.65 once the momentum traders give up holding out for a better entry price.  And if we power through $27.90, as we did at the last attempt, $31.35 will again hove into view.

So, what would shake our bullish conviction?  Well, a sharp move back below $24.65 would certainly grab our attention and a deeper sell-off to below $21.46 would challenge LTC's virtuous long-term uptrend meaningfully.

That's all we have for now but we'll keep you updated as the situation develops.

Rob @ BitScan

BTC Update 10 January

G'day Peeps!

In our last post we gave a BUY advice and that recommendation still looks good.

This is how it looks on the chart:

As you can see the market is currently butting right up against resistance at $960 (Gox) but when this is viewed against the sustained support that bitcoin has been picking up over the last 2 days against rising support it's only a matter of time before this all of resistance gives way and when that happens the wave of long orders it'll trigger ought to power the market back up to $1065 - at least.

It has to be said that we remain pretty bullish.

The only thing that would challenge this position is if the market stalls at this resistance level again for any longer than 8 hours or so.  This is, after-all our third 'look' at $960 as resistance and if it manages to hold again, for too long, bitcoin bulls will start taking their money of off the table, sentiment will swing and you know the rest...

Go bitcoin!

Rob @ BitScan

BTC Update 9 January

G'day All!

In our last post we identified the market as trading at key support. Much further South and the sell-off would accelerate BUT if support held, buyers might once again re-enter the fray, providing the motive force for the next rally.

While the market hasn't moved a great deal in price terms, over the last 24 hours, the support zone we identified is continuing to hold.  Let's have a look at it on a chart:

While trading volume is down and the candles look decidedly non-committal, the market has - nevertheless - managed to claw its way back above the inflection point at $920 and is currently probing resistance at $960.

Given the bearish assault that support has withstood over the last 24 hours this is, in our view, a pretty bullish indicator and while it is possible that a renewed sell-off in Europe, and the US after it, finally drives the market decisively through $900, the longer this indecision endures, the more chance there is that the buyers will re-assert themselves.

For this reason, and given the market's relative proximity to support, we see this as a sensible zone to enter the market long or add on to an existing position - for active traders.  Put another way, we starting to consider the recent sell-off as a normal correction, rather than the pre-cursor to a reversal in overarching sentiment.

As such, it represents an opportunity to enter this market long at a relative discount within the existing bullish context.

Having said this, a further plunge to below $835 would force us to re-consider this bias so if you fancy taking a punt here, you need to watch the market's subsequent movement carefully with your finger on the sell trigger should it become necessary to cut your loss.

For the time being, though, the knife's fall appears to have been arrested. Accordingly, it presents the brave with an opportunity to pick up bitcoin at a wholesale price.

We'll be in touch again as the situation develops.

Rob @ BitScan

BTC Update 8 January

G'day Peeps,

So, as we intimated in our last post, the ongoing bitcoin sell-off has accelerated as successive technical support zones were pierced.

Let's look at it on a chart:

What we see before us is a perfect illustration of what happens when a market tries but fails to break out of an established trend channel; basically, it steams back in the other direction to re-test the other side of that channel.

Further, in this particular case we have already pierced channel support on the far side once and the market still looks weak.  If this weakness carries into the European open we are likely to retest the low of the day again and if it gives the market will trade back down to $835 (Gox) before you can say knife.  What happens after that is less certain as support will be strong here.  Depending on what we see in terms of rejection this may prove a reasonable BUY point. Stay tuned on this one.

Having said this it isn't conceivable that support builds from where we currently stand and if we manage to rally and hold back above our neighborhood inflection point (@ arond $920 Gox) bears will start to close out their shorts and more and more bulls will climb back aboard.

However, in the meantime, we need to be wary of an accelerating sell-off. This is not the moment to be buying on limit orders; don't try and catch the falling knife...

Rob @ BitScan

BTC Update 7 Jan

G'day Fellas,

Over the last 24 hours we have seen what happens when an accelerating rally meets a well defined wall of resistance.  Let's look at it on a chart:

Basically what happened here is that the market rose swiftly on a one way order flow as the final weak bulls piled into the market.  When sufficient smart money liquidates to profit at resistance, the previously annotated $1065 (on Gox), coupled with the predictable bear counter-attack, the order flow swiftly reverses and having 'climbed a stairway' the market 'falls off a cliff'.

What happens next will be interesting.

For the time being the steepest short term trend support line (faint green) is holding.  This may be sufficient to reverse the order flow back to the upside.  If it is resistance at $1065 will bar far weaker at the second look and we may well punch through.

If, on the other hand this steeply rising support line gives, the market will probe lower to the next steepest trend line, which is currently co-incident with horizontal support at $960.

If support here fails to reverse the order flow the market will probe lower again to retest the far side of the longer term trend channel, which is currently co-incident with the inflection point (bold red line) we identified in our last post.

And this could all happen very swiftly when Europe and then the US comes on line.

For active traders, the point this price action serves to illustrate is the need to book profits when they present, especially when faced with a significant price point after a nice run up in your favor.

The broader point is to understand what sort of trader you are.  If 'active' then this is how you must trade; get in and out early.  If your time horizon is longer you can afford to be more circumspect.  If an investor then you need to develop the conviction not to be 'shaken out' by these inevitable speed bumps.

But then I am sure that I am preaching to the converted...

Whatever, the next 24 hours could prove significant.  See you on the other side...

Rob @ BitScan

LTC First Look Analysis 5-6 January

Okay, so you forced our hand; we're going to start looking at Lightcoin.

Before we start, I'd like to lay down some grounding principles for those readers who are not regular readers of our bitcoin analysis:

1. Until a better charting solution presents we will continue to use the MtGox feed to TradingView.  Those of you who trade through different exchanges will have no option but to do the actual price conversions manually, satisfied that the relative technical picture will mirror that which we are conducting our analysis on.

2. We are classic support and resistance traders.  While we might consider more advanced technical tools in our analysis we will never expose our readers to them.  This decision is based on thousands of hours of charting and trading experience, our belief that the past is the best indicator we will ever have as to what might happen in the future and our desire to keep our charts as clean and 'readable' as possible for you guys.

3. In analyzing LTC, we will continue to follow our 3 step process of identifying the key price points, understanding the prevailing context and only advocating trade execution where we detect extreme value or risk.

4. We're going to take our time to build a deep understanding the personality of this new - and relatively illiquid - market.

With this said, let's get going and have a look at the chart:

Okay, so we'll start with a short summary of where we have been and where we are at...

Firstly, we can see that the overall trend is UP - or bullish (... 'no shit, Sherlock', I hear you chime(!)).  The second is that having extended far above its mean in late November, LTC has been subject to a hugely volatile correction, back to that mean (indicated by the 2 green rising support lines).  Next we can see that, like bitcoin, LTC has managed to trade back beyond the technical boundary of this correction (indicated by the sloping faint red descending resistance line) and that we are now, once again established in a nascent bullish recovery.

This establishes a near term context of UP; put another way we need - currently - to be focused on places in price at which we might BUY at value - or wholesale - prices within in the context of the prevailing condition.  And this means looking below price to the convergence of potential support areas at the extreme of the existing condition.

Okay, so where do we see these key price points?  Well, helpfully, they are annotated in bold on the chart.  Below the market we can see historical support at $21.46, which is currently coincident with rising support (thick green diagonal line).  Should the market dip back here ($21.46) in the short term, we would advocate establishing or adding to long (BUY) positions here as this represents the extreme of the existing condition, meaning in turn that if we are wrong we will find out at the minimum cost, and if we are right we will subsequently book the maximum profit.  More risk tolerant traders might also consider a BUY against near term support at $24.46 - so long as they are clear that the market could easily trade $3 dollars below their entry price without demonstrating that their trade is on the wrong side of sentiment.  Over time this trading style can be costly!

Looking above price, on the other hand, we want you all to be clear that $27.90 is going to represent meaningful resistance to further advances. This view is based on the fact that it has proven the key inflection point in this instrument's short history; reversing sentiment on no less than 6 occasions in the last 2 months.  Further we note that it is currently co-incident with the upper (soft) boundary of our current trend channel.

While it is entirely possible that the market will trade straight back through $27.90,  all bullish market participants need to brace themselves for increased volatility and a potential reversal at this point in price.

That's all we have for the moment.  Please don't hesitate to fire any questions you may have straight back down the bearing.

Speak soon.

Rob @ BitScan

BTC Update 5-6 Jan

G'day Peeps!

So, having paused, briefly, at the inflection point we identified yesterday, the market has powered straight up through key resistance at $960 (Gox) like a hot knife through butter. Here's how it looks on a chart:

Focusing on the right hand edge we can see that having also broken through the top of our trend channel line (faint green diagonal) the market is currently 'leaning back' against it for support.  What happens next will be significant.

If, this rising support holds, buyers will begin piling into the market in sufficient numbers to establish steeper trend support and before we know it the next key resistance at $1065 will be challenged.

If, on the other hand, buying evaporates here, the trend channel line will give, profit will be taken and we will equally quickly see the market retesting lower support at $960 - and if this level gives the bottom of the channel will again hove back into view.

In the meantime we have to understand that this trend is moving from its nascent - or wholesale - stage to one of increased exuberance. Momentum/emotional traders are starting to see sufficient strength to confirm their bias and take the plunge back into the market. At the same moment a portion of the smarter money, having gotten in much earlier, will be taking the other side of these later buy trades to lighten up and book profit.

While we don't yet know how this situation will evolve, we need to understand that it is happening.  Long active-traders should now be tracking the market closely and at least thinking about their exit strategy. Merchants looking to liquidate in the near term need also to be clear that we are back at relatively high prices with key resistance not far to the North.

Bitcoin investors can, as ever, afford to sit back and allow themselves a cautious smile - particularly if they are regular readers of this analysis.  Having weathered the impact of the Chinese Dump and followed our BUY advice at $750, they are already sitting on tidy additional profits. Happy Days...

Could we just leave you with another reminder that our blogger feed will close in days few, so if you aren't already, you need to be reading this analysis through the website; http://bitscan.com. Of course, if you are on the App - you remain good to go.

Absolutely finally - and in response to popular demand - we will, from today, be trialing LTC analysis alongside BTC, so be sure to check the title of each post before you get stuck in to the detail. On this front we would appreciate your feedback as we establish this new service.  Indeed, if there is anything you don't like or understand about anything you see or read here - and cannot pick up our theme from reading previous posts - please do let us know.

That's all for now,

Rob @ BitScan

BTC Update 4-5 January

G'day Guys!

Well, our BUY advice at $750 (Gox) is starting to look really nice now as upside momentum continues to build.  Here's how it looks on a chart:

As you can see, having traded through $835, the market had a brief look back at this area as Support, but this was immediately rejected as new buyers were clearly eager to get onto the move. This is a really healthy sign.  We also like the fact that progress North remains relatively measured; the longer this continues the better.

For the time being you will note that progress has stalled at around $920, and this is down to the earlier inflection at this price point that we have highlighted.  This may send the market into reverse for a time but so long as we don't violate rising support (thick green diagonal line) the market will still be targeting the $960 area and quite possibly higher.

So, what does this mean moving forward?

Well, the first point we would make is that opportunities to buy, (at least for active traders) are probably behind us, unless we dip back to around $835 from here.  Secondly, the counter-attack that will be amassing at $960 shouldn't be underestimated.  It is quite possible that the market will not make it through this resistance wall at the first pass and we are likely to see volatility increase again as the battle ensues.  With this in mind, active traders or businesses looking for a sensible point in price to liquidate back to fiat should consider setting up their limit sell orders at this level or just below it.

Investors, on the other hand, can feel increasingly confident that the 'Chinese Dump' is moving into bitcoin's rear view mirror as 'the honey badger' sets itself up for another run at the highs.

In sum, the rally remains nascent, but we do sense gently gathering momentum which bodes well in the short to medium term.

And that's all we have for now, except to remind those of you who are reading this on blogger that you need to move across to our new site, http://bitscan.com as we will be shutting the blog down very shortly.

Apart from this, we wish you a very happy end to your weekends and will back online with an update if the situation changes - or in any case, early next week.

Cheers,

Rob @ BitScan

BTC Update 2-3 Jan 2014

G'day Peeps,

The last 4 hours have witnessed the upside breakout through resistance at $835 (Gox), as predicted in our last post.  Here is how it looks on a chart:

To re-cap, having signalled a BUY at $750, we advised that it would be a significant swing point moving forward; if it held, the rally would continue; if it gave, a continuation of the sell-off was likely to ensue.

In the event this is exactly what we have seen.  When $750 was tested and held, a clear upward sloping support line was established, against which traders have been 'accumulating' bitcoin ever since. What we are currently witnessing is an attempt to break back above the next key resistance level.  While we don't yet know whether this will succeed we can see from the volume spike that an acceleration in buying has moved the market far enough to trigger the loss stops of bitcoin bears  (positioned just North of $835) which has fed the positive order flow further.

This said, we'd like to take you back to another remark we made in recent posts; namely that nascent rallies always look weak, or 'ugly'. On this point we'd like to draw your attention to the string of weak bars - or candles - immediately preceding the upside breakout. Notice that none of them looks convincing; nearly all of them seem to indicate that the market is teetering on the edge of a reversal. And yet, the slow march upwards, bar on bar, is relentless and in this case it eventually leads to a momentum surge, as sufficient buyers give up waiting for a better price and pile into the market.

And this is what we mean about trading 'from the levels'.  In this case the level to buy against was $750 - as historical evidence had shown us that it had (for whatever reason) had the ability to reverse sentiment. Every tick North of here was a tick less potential profit, paid in return for increased 'confidence' in a successful outcome.  But what this chart tells us is that waiting is a fools errand because by the time the momentum bar arrives $100 a bitcoin has been sacrificed - and we still don't know that the rally will continue!

So, with that little sermon complete (...!), let us look ahead.  And what we see here is that the next significant resistance line is up at $960. We can also see that this level is currently coincident with the top of the rising trend channel line (shown as a fine green line).  Anyone needing to liquidate bitcoin back to fiat would be wise to form a plan based on this price point.

Having said this, the current breakout isn't yet a done deal and its entirely possible that the market reverses from where we currently sit.  In this case we would point out that any powerful reversal back through $835 would almost certainly provoke us to pull the pin on the additional positions we established at $750.

Finally, please remember that this rally is still nascent; it could easily morph back into a range, before reversing or continuing.  In the meantime all we can do is watch and trade the levels.

It really is all about the levels... :-)

Rob @ BitScan

Ps. Happy New Year!