Bitcoin Trading Alert originally sent to subscribers on April 14, 2015,
11:17 AM.
In short: speculative short positions, stop-loss at $239,
take-profit at $153.
Infosys, an Indian IT services and IT consulting company, is now looking
into blockchain as a possible addition to the company products and services,
we read on the Business Standard website:
According to a report in HT Mint, the Bengaluru-headquartered information
technology services provider is assessing the merits of Blockchain, an
open-source financial database that records all transactions of virtual
currency Bitcoin, to see if the technology could be integrated into Finacle.
The move comes at a time when many people are looking at more convenient
ways to do banking, such as mobile banking and making transactions using
digital currencies like Bitcoin and Ripple.
Michael Reh, assigned to revive the fortunes of Finacle, is reported to be
assessing Blockchain. Former SAP Labs vice-president (strategy), Sheenam
Ohrie, hired by Infosys as the new head of delivery, testing and support of
Finacle, and Fuat Bozkurt, formerly with Sopra Banking Software; and Manju H
C, earlier with Swiss firm Temenos as banking solutions lead, are assisting
Reh.
This comes right on the heels of the news that IBM and Samsung are working
on blockchain-based solutions. Now, Infosys, with assets just under $20
billion dollars, is another heavyweight reported to be focusing on the
possible uses for the Bitcoin technology. This doesn’t necessarily mean that
the company will actually accept Bitcoin in any way but it might suggest that
it will use the ledger system to arrive at new solutions for banking.
The recent news of mature companies starting to play with Bitcoin and the
underlying technology suggests that players in the tech sector are taking
Bitcoin seriously and they are slowly beginning to work possible applications
of the ledger systems beyond what is currently available. It will still take
years for more companies to follow the trend and to develop products
customers will use but it might just as well be the case that the movement
has already begun.
For now, let’s take a look at the charts.
On BitStamp, we saw a more decisive move yesterday. Following the
publication of our yesterday’s alert, the volume picked up and Bitcoin
dropped to below $220, ending the day slightly above this level. This, to an
extent, reflected the short-term outlook that we outlined in our last alert,
hours before the more significant move:
(…) Bitcoin slipped back below $250 on Apr. 8 and has stayed below this
level since. Actually, on Friday the currency dropped close to $230 and it
remained in that range over the weekend. We’ve already seen depreciation from
around $260 to $230. Is it time for a breather?
We don’t think so. Of course, no market moves in a straight line and there
are no sure bets in any conditions but the current picture seems way more
bearish than could be inferred from the lack of action below $250. Yes,
Bitcoin hasn’t moved much below $250, we haven’t really seen strong
depreciation and the volume levels have been moderate. But these are not
signs of a rebound, in our opinion.
Bitcoin is below $250, there has been no rebound. Over the last week, the
days with the highest volume levels were those when we saw more pronounced
declines. Today, we haven’t really seen much action (…) but all this fit
pretty well with the bearish scenario. Bitcoin looks like it’s stopped below
the $250 level to consolidate or even more up slightly. A shallow correction
to the upside could be seen at this time. On the other hand, the fact that
the recent depreciation hasn’t really been significant leaves room for even
more declines and this is the outcome we would bet on. In other words, if the
short-term outlook was bearish on Friday, it is even more so today. Actually,
the outlook has been deteriorating for some time now, without a significant
move to the downside. This makes the current situation a potential
opportunity for a short trade. If Bitcoin continues falling, we might see the
currency at $200 (dashed red line in the chart) or even lower.
Bitcoin followed lower and today also looks like a continuation of the
bearish trend. Bitcoin has depreciated slightly (this is written after 10:00
a.m. ET), almost hitting $215 at one point. The volume is shaping up to end
close to what we saw yesterday (the day is not over yet, mind). The most pressing
question you might consider based on the already profitable hypothetical
short position is whether it’s time for a pause or a short bounce to the
upside. A move up is definitely possible since Bitcoin has been falling for
some time now. On the other hand, we still are not in oversold territory, so
there still might be room for declines before a counter-trend move up
materializes. We opt to wait and see as in the past significant local tops
have only been in after Bitcoin moved to positions more oversold than what
we’re seeing just now.
On the long-term
BTC-e chart, yesterday’s decline is already visible. Let’s quote our last
alert written before the move:
(…) the current trend sure seems to be to the downside. Bitcoin is below
both a possible rising trend line and below $250 (green line in the chart).
The long-term perspective provides us with even more bearish indications that
the short-term one.
Also, mind that Bitcoin has been moving lower for just over a week (the
most recent move) and the depreciation hasn’t been very strong. This still
leaves room for the currency to decline. Add that up to the prevailing
downtrend and it looks like the previous correction to $300 might be over. In
these circumstances, it seems that a bet on Bitcoin going down might be the
favorable position. A rebound or a breather is possible, but the current
environment indicates that Bitcoin might move lower significantly in the days
or weeks to come.
The action yesterday and today has confirmed the points we made yesterday,
but we would like to focus on the current position at the moment. We first
suggested a hypothetical short position on Mar. 20, 2015 when Bitcoin was
still above $250 and the daily low stood at $254. Yesterday, when our last
alert was published, Bitcoin was in the $230 range and the position was
already profitable. Since then this position has become even more profitable
and overall the current return on the hypothetical position stands at 14.2%
(this doesn’t take transaction costs into account). It’s not bad for a trade
spanning less than one month but we’re still inclined to bet on the profits
getting even bigger. There are no sure bets in any market and Bitcoin might
be getting closer to oversold territory but in our opinion it’s not there
quite yet. Taking this into account, we leave the hypothetical position
untouched allowing the profits to grow, but at the same time we adjust our
stop-loss levels to guard the returns. The next couple of days might be even
more intense for Bitcoin traders than the last few.
Summing up, in our opinion speculative short positions
might be the way to go now.
Trading position (short-term, our opinion): short,
stop-loss at $239, take-profit at $153.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin
Trading Alerts
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