Bitcoin Falling, Pulled Lower By Image Problems
Ben Myers | Nov 19, 2014 06:43AM ET
The Bitcoin (BTC-eUSD) price trended lower, losing 2.14% or $8.31 according to the BitStamp exchange. The price action tested the first daily support level at $370.13 but the price bounced higher. The first daily resistance lies at $410.13. If the first daily support is broken through, then the next support lies at $352.56. The price should tend towards the $385 level, the 61.8% retracement level from the high posted exactly one week ago, since the 50% Fibonacci retracement at $364.46 has held as strong support so far. The next retracement level if the price moves higher lies at $411.69, the 76.4% Fibonacci retracement level.
Regulation was the topic at the Bloomberg Bitcoin conference yesterday, with panelists voicing concerns about Bitcoin’s image problems. However, panelists also took a positive tone regarding the role of the crypto-currency in financial services. Chain CEO Adam Ludwin responded to claims that Bitcoin and the Blockchain can be separated by stating that innovators are building on both and that they are symbiotic.
The Commodity Futures Trading Commission (CFTC) has asserted that the agency can take authority to take enforcement actions against price manipulation in Bitcoin markets, an announcement made at the Bloomberg bitcoin conference. The CFTC is not singling out Bitcoin and a commissioner from the agency has stressed that he support flexible regulation. The CFTC is currently looking at the rule set and understanding Bitcoin-related regulatory obligations, as it does with all asset classes.
The 4-hour chart below shows the price action from the BitStamp exchange, along with the Ichimoku cloud. The price action has broken below the cloud and the base line has moved above the conversion line, signalling a bearish market. The Ichimoku cloud has also turned red, which could indicate the start of a downward trend. The Ichimoku cloud should act as resistance going forward, at around the $392-$405 level. Further confirmation of a downward trend will be given if the lagging line breaks below the cloud.
Looking at the daily chart, it seems that the bears are in control of the market right now. The price is in the Ichimoku cloud, suggesting no general direction, but two bearish candles were formed prior to entering this area. This signals the bears are in control and the price may decline further. Also, the lagging line failed to break above the cloud, indicating a continuation of the downward trend. The price looks set to close below the base line today, which will strengthen bears and provide bearish momentum. The cloud should provide support at $360-$350.
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