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4 Battle Lines that Predict the Future of Bitcoin

By: Joseph Russo | Friday, February 7, 2014

4 technical battle lines define a continued boom or ultimate bust for bitcoin.

The jury remains out as to whether or not a permanent top is in place upon the Mt.Gox 2013 print high of 1242 BTC/USD. With one contingency, the absolute truth remains that a rather simple TA (Technical Analysis) chart pattern is projecting a specific downside price target of ZERO for Bitcoin.

Initially, despite personal reservations amid widespread backlash against the crypto-digital-currency, particularly from the monetary metals community, upon further research, I have come to respect many of the positive aspects that this medium of exchange may bring about.

Technically however, the battle lines are drawn.

Bitcoin Daily Chart

Two of the most important battle lines are drawn horizontally at the Mt.Gox price high of 1242 (resistance), and at 455 (support). Going forward, any transaction recorded beneath 455 will negate future prospects of a 600+-point breakout to the upside.

Acting as a battle line of resistance, the bullish 621-pt buy-trigger is dynamic in that it is rising slightly, becoming more elusive to achieve with each passing day. As of today, the bullish breakout would trigger with a price advance that breaks out above the 1125 handle. Tomorrow and each day thereafter, the bullish upside breakout line shall rise in accordance with the gradient of its trajectory so noted.

Risk of Ruin:

Although Investopedia defines risk of ruin as the probability of an individual losing sufficient trading funds to the point at which continuing on is no longer an option, we have coined this phrase to describe the specific features of a rather ominous trendline trajectory.

In our context, a risk of ruin trendline trajectory represents a battle line, which if breached, will measure a downside price target less than ZERO. In December of 2013, a risk of ruin trajectory of such magnitude breached within the Mt.Gox dataset.

Also acting as a battle line of resistance going forward, the sharply rising risk of ruin trajectory presented graphically and so noted within each of these charts, defends a downside price target toward ZERO so long as 1242 remains the print high.

Bitcoin Chart 2

In our last missive regarding BITCOIN on December 6, 2013, we projected that:

"Similarly in contrast, so long as 1240 holds pivot high, a bearish breakdown and sustained trade beneath the rising red trendline cites boundary to triggering a 375-pt decline toward the 500 level."

Although BTC was trading above 1000 at the time, as evidenced by the subsequent price action later in December, the December 6 projection captured the 500 target handily upon the rather swift move down to the 455 print low.

It is important to bear in mind however; that chart patterns proven capable of measuring projected travel distances upon breaches or breakouts, do not necessarily guarantee with 100% certainty that such projections will occur, nor beyond the stated negation constraints noted, do they provide any context of time within which such projections may materialize.

All else being equal, so long as one positions oneself on the right side of a market, and in confluence with ones decided timeframe and risk tolerance, beyond any collateral damage emitted of existential proportion, nothing else matters.

GeoEngineering, Collateral Damage of Existential Proportion?

Tis Strange -- but true; for truth is always strange ...


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Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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