Short Term Update: Long 1 unit (100 bitcoins) at 123.40$

Short Term Update

This is a short term view of May, as usual i added the VWAP and deviation lines. After two failed attempts to break the upper channel line at 121$ the market is now consolidating in a narrow range around 115$. Despite this congestion phase i think that BTC/USD is preparing a new upside move, why?

Well, i’ve learned in many years that positive reaction to bad news tells you that investors sentiment is bullish because they minimize bad news and emphasize good news.  The ability of Bulls to maintain a sequence of higher lows (bottom at 79$,97$ and 104$ after the bad news of MtGox in USA) does suggest a major move to the upside. A breakout of 120$-125$ resistance price zone will probably convince me to open a new trade.

To conclude it’s always hard to say on which direction BTC/USD will break but i must consider that the underlying long term trend is still UP. Thus,  i’m tempted to say that this price congestion will probably resolve in an upside breakout of the vwap upperline.

2 Years Anniversary!

Today marks the Two Year Blog Anniversary of btctrading.com!
It is really hard to believe that two years have already gone by from the very first post that was published back in 2011 and 147 posts later, here we are with more then 115k hits,not bad for a free blog i’ve started just for fun.  I value the time you take to stop your daily tasks to read my posts and leave your wonderful comments. Your input brings so much value to this blog, more than you know.

I’d like to share with all of you a view of monthly visits:

It is interesting to see some relationship with market behaviour, every top in monthly accesses has been followed by a top in the market, except the August 2012 top were the number of accesses was less but a slight top it is still noticeable. I think that a top is in with the last 266$ seen in April but this doesn’t mean that the market is bearish, i think it is consolidating above 100$ and preparing for the next move.

Happy Blog Anniversary – Thank you for your support and see you at the next update!

Long Term Update: Head and Shoulders

The head and shoulder pattern is one of the most common reversal formation, while it is preferable that the left and right shoulders be symmetrical, it is not an absolute requirement, in fact the slope of the neckline (pointed out in the attached left chart, click to enlarge it)  will affect the pattern’s degree of bearishness; a downward slope is more bearish than an upward slope, in this particular case the slope is telling us that it’s not much bearish and indeed the market bottomed out at 79$ near the level that i indicated as a potential support in one of my previous update and exactly at the long term VWAP (computed using last 3 months of data) without a severe crash under 50$.
This pattern helped me in the decision to close my long term trade 5 days ago at 128$.

Looking the big picture i think that this market it’s still bullish in the long term as long as it stays above 80$, another bullish indication is that the recent bottom has been higher then the double bottom made in April, now BTC/USD is approaching the first deviation line at about 130$ and it’s crucial to go above it with a good volume breakout. A failure to conquer the 130$ level would be a first warning of a downside move, probably headed below the recent 79$ bottom.

Long Term Update: MtGox sold 1 unit at 128$ now flat

I decided to close this long term trade initiated 5 months ago (december 2012) and take a break. This is the second consecutive day with negative net volume (outflow of money from the market) and this starts to worry me a bit because BTC/USD is doing lower highs and it failed to go above the 170$ resistance level. If i’m wrong there are no problems, i’ll wait a strong breakout of an important resistance before buying again this market. In the meanwhile i’ll observe carefully the support level at 110$ or so.

I bought at 13$ 5 months ago, profit for this trade is ~11500$, total gross profit so far 14261$, 9 trades profitable out of 14 total trades.

Short Term Update: Holding above support

BTC/USD formed a double bottom at 120$ on the hourly chart, and it is reacting well, as long as it stays above the VWAP at 114$ i’m not worried.

If another quick flash crash will take place i recommend to watch out the 75$-80$ price zone where i think BTC/USD will find support and react strongly; that price zone is around the minus one standard deviation of April volume weighted average price. It is a very improbable occurrence a test to the -2 standard deviation line at 50$, so for the remaining part of April and probably till mid May, BTC/USD will stay away from fifty dollars. 

Short Term Update: Near resistance

Last 2 days BTC/USD has been very bullish avoiding to fall in a congestion, bitcoin is near the first strong resistance i’ve since the 50$ double bottom. A first evidence of the bullish behaviour is the strong volume on ask side of the order book, once ask side will become prevalent in the mtgox orderbook i think that another correction will take place, but not as strong as the first one.

168$ is not only the +2 standard deviation line of April VWAP but also the 50% midpoint of the 266$->54.5$ first correction , i expect some resistance here but for now i’m not going to close my trade.

For who want to play extremely safe, i recommend then to close at 170$ or so.

Congestion?

3 inside bars in the last 3 days, BTC/USD is close to be in a congestion area, the measuring bar for the congestion is the  bar of last April, 19.

Usually any time prices close on four consecutive bars, within the confines of the range of a “measuring bar”, you have a congestion. The measuring bar broke also the VWAP from below to above it, a sign that i consider a bullish setup.

On the attached chart i plot the +2/-2 standard deviation line but when volatility drops a bit we can consider also the +1/-1 st.dev.line; the +1 std. deviation line is at 139$, close to the recent high of 136.5$, the -1 std.deviation line is at 75$.

I think that if we are going to see a prolonged period of congestion it is not excluded a visit to 75$ if BTC/USD breaks down out of the congestion pattern, time will tell. For now i stay long with my long term trade, stoploss is under the 50$ double bottom support.

Last comment about the recent spike in volatility, well i never seen before an insane volatility like the one see in the bitcoin market, to give you an idea actual volatility is something like 13 times more then the historical volatility of american stocks, just crazy!

Short Term Update: Daily Chart of April

During the last 24 hours of rebounding prices the net volume turned positive again, sign of a comeback of buyers after a huge 7 days sell-off. Overall volume is at all time high, with more then 500k btc traded at the two bottoms, april 12 at 54.5$ and yesterday at 50$.

Despite an increasing selling pressure, yesterday the market failed to go below 50$, again this is a sign of buyers coming back and sellers going out of ammunitions. Looking VWAP levels, support stands now at 40$ and resistance at 172$, VWAP is at 110$  and it will be an important test to see if this rebounce just started has enough fuel to go above the VWAP. After 6 consecutive days with lower highs today BTC/USD has broken yesterday top at 84.5$ with an intraday high of 88$.

If sellers will take control again and the market fall below 60$ i shall conclude that BTC/USD is headed at least down to 40$, to the minus 2 standard deviation line of april VWAP levels. We are at a critical juncture that might confirm a long term double bottom for bitcoin.

 

 

Short Term Update

Good morning, after more then one day i finally managed to download updated data about mtgoxUSD from bitcoinchart , i’ve now a better picture of what is going on. I think that the correction ended in a severe selling climax bar that normally occurs at market bottom with a total volume of 475k btcs that changed hands, remarkably. The bottom occured just below the minus two standard deviation line of the VWAP (volume weighted average price) the excess below it  it’s what  i call  ”last motion”; support is now at 68$, vwap is at 130$ and it’s providing some sort of resistance, upper deviation line is at 190$ where probably this reaction will meet strong resistance. It is very important in the next week to move above the vwap over 130$, otherwise i’ve to conclude that the market temporary reversed to the bearish side as long as it stays under the reference average.

I conclude this update spending two words on net volume, that i repeat it’s the difference from volume made on an uptick minus volume made on a downtick, i use it  to judge the momentum or trend in order to make assumptions about its future price movements. Well, i report a net volume of minus 70k btc on the day low, i’ve seen worse days in the last 2 years, for example last August 2012 during the infamous “pirate40″ sell off i remember a  net volume of more then -110k bitcoins, another selling climax bar that marked a strong bottom, 7.5$ at that time.

It has been a severe drop from 266$ down to 54$ but i remain confident that the recent bottom will hold. If i’m wrong and the market will persist with its short term bearish behaviour and it will go under 50$ i’ll probably have to close my long term trade from 13$.