Bitcoin TA: Another triangle formation (and could this break soon?)steemCreated with Sketch.

in #trading7 years ago

Bitcoin has already fallen quite a lot from it's recent high. But is now a good value buying opportunity - or are there yet better value buying opportunities ahead?! Whatever the answer turns out to be after the fact, I thought it might be interesting to discuss some of the current charts.

(1)
Current triangle formation
Screen Shot 2017-09-10 at 02.58.30.png
This looks to be a reasonable triangle formation to me (at least in regard to the bottom slope).
(But right as I'm typing this, the price looks to be a bit droopy, so it will be interesting to see whether we stay within the triangle at the time this post goes out! :) )

(2)
Let's look at the previous triangle formation from several months ago for comparison purposes.
Screen Shot 2017-09-10 at 03.07.22.png
The previous triangle broke downwards. So, if the pattern repeats, then we might expect a downward break at some point (but this is only if it repeats! :) )

(3)
I would say EMA cross-over points are most important thing I use for buying/selling decisions. (Although, often if you wait for the cross-over to actually occur, the price may have already jumped or fallen by large amounts!)
Here's the 12 hour chart, with buy/sell signals marked for this strategy and timeframeScreen Shot 2017-09-10 at 04.12.53.png
I've chosen this timeframe because on both the previous rise of a few months ago, and the recent rise, we did not get any change-overs on this time-frame. Ideally, for any rise I would like to choose the time-frame that had no change-overs during the whole of the rise - because this means you just have one buy signal near the start of the rise and one sell signal somewhere hopefully close to the top!
As we can see from this chart, we have just had a cross-over in the negative direction, so if you were using this strategy then you might have been looking to sell at an opportune point close to the cross-over.

(4)
MACD cross-overs do not give the same certainty as EMA cross-overs because they are a derivative of the EMAs - they kind of measure EMA difference acceleration/deceleration. But sometimes they can work very well. As we can see from the following chart, the 3 day MACD has turned out to be a great match so far this year for rough times to buy/sell on a longer timeframe:
Screen Shot 2017-09-10 at 03.13.06.png
On the current chart it's still green - but it looks like it might be close to going red. So, If you were using this chart for deciding when to buy/sell, then you might be anticipating the colour going red soon and the resulting 'sell signal' implication.

(5)
So, some of the above charts might point to currently having a 'sell' position if you were following them - but if so, how deep could we expect a dip to be? For comparison, lets look at the previous dip we had a few months back.
Screen Shot 2017-09-10 at 03.19.28.png
I'm never sure where to place the starting point for a fibonacci retrace pattern, but the top is always obvious at least ;P
Anyway, with the starting point I chose, we ended getting a dip which was pretty close to the 61.8% retrace level.

(6)
Now, lets plot a fibonacci pattern for the current top (again, the starting point is subjective).
Screen Shot 2017-09-10 at 03.25.53.png
I've also marked a magenta line to indicate the potential scenario if history were to repeat itself and we got another retrace to the 61.8% level (but this a very big if!) Note: This is not a prediction - it's just an example of one scenario. Personally, I can only really guess at which level we might retrace to (if at all)! Generally, I'd be expect at least a 50% retrace though - so I might place a buy order just above this level - followed perhaps by more buy orders all the way down :-)

(7)
Finally, another option might be to consider the whole overall move which started at the beginning of the year for possible fibonacci retrace levels (again, the starting point is arbitrary):
Screen Shot 2017-09-10 at 03.32.57.png
On this chart, for variety, I've chosen to the scenario where we might bounce on the 50% retrace level - but this is in no way a prediction!

Concluding remarks:
Will the price go up or down from here or even stay at roughly this level? Everyone must make up their own mind. Charts can only show what's happened in the past. Personally I'm leaning towards being bearish right now - based primarily on the EMA and MACD charts I presented above. However, these types of chart indicators can flip back very quickly - and if they do, I'll be changing my outlook immediately! And, while some of the charts show a potential dip scenario, please bear in mind that anything can happen - including continuing upwards to $1000 or more instead.

Also, as we saw during the previous dip: As well being a good buying opportunity, it bounced back higher than it started off. In this way, a correction can be a very positive event (provided you don't end up selling at the bottom, and not buying back in!) Also, if you believe long term that the price will be higher, then just holding (and not trading) is a good strategy.

Disclaimer:
I'm not offering and trading advice. Any reader of this post must take complete responsibility for any trading decisions they make. Instead, I've only shown some charts and some possible trading strategies/signals (out of many); and, any signals like these can end up losing money rather than making money. And, other signal/strategies might point to taking the opposite view. (The 'art' is trying to decide which signals to use at any given time!)

Comments welcome [ but please - only related to 'boring technical analysis' :) ]
Anything I could do better (I want to present a balanced/objective view, but still give my personal comments).
Any TA counter-arguments?

output_85ri3V.gif
Again, thanks to @karensuestudios for my avatar (and the above animation)!! :D

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Great analysis! I believe the bitcoin price will drop and we will have a correction towards ~$3200 very soon with the news from China before we have another rising trend. There was a bearish engulfing pattern when Bitcoin was near $5000 and according to Elliot Wave Theory, it is likely that the price have finished the five rising waves and now it is probably going through the c wave, with the previous lowest point at a = ~$4000 and highest point at b = ~$4700.


elliot1.gif

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bitcointrend.png

Good analysis..
As 4236 was broken ..
Bitcoin will move toward 3793 for now..

Thanks :)

Very interesting, thanks for sharing.

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News from China is anything but the gossip that i would not call the news that has happened before many times already. Who is the official source anyway?
And having in mind in the debt economy all those dollars need to go somewhere and they are definitely not going to Bond or stock markets. Some went to gold and silver already and the rest is going to end in cryptocurrencies in my opinion or it might be just a wishful thinking :-)

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Looking at this with the strategic lens of efficient market hypothesis, I conclude that it depends : on the current news , and speculative movers and shakers of the market because it is not efficient. So my strategy in crypto like bitcoin will be to gradually buy and hold because the future looks bright in the long run. However as I indicated in my blog posts, steem ecosystem will be a force to recon with in few years time..Hiyaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

The Blockchain is a great technology and for the time being we can expect that emergent nature of the community will overcome all the bans, governments and restrictions and to continuously change technology on its way.

Having said this it's very difficult to bet on the right crypto, which one will be the one that will solve the specific issue of the moment?

My suggestion would be to:

  • yes spend time to select cryptos and tokens, look at graphs and read about teams and regulation
  • but always maintain a portfolio of cryptos so that you are not too exposed to idiosyncratic risk

I wrote a small series on diversification benefits and the income that can be created through it.

CryptoPortfolio - Extract a "diversification dividend" - Part 1: Geometric and Arithmetic Returns
CryptoPortfolio - Extract a "diversification dividend" - Part 2: Portfolio Risk and Diversification
CryptoPortfolio - Extract a "diversification dividend" - Part 3: How to make 8% more per year

I would be grateful to anyone who wants to take a look and let me know what he/she thinks! Thanks

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