Long Term Update: MtGox

As you can see in this daily chart, BTC/USD is forming a symmetrical triangle, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and thesymmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time.

While there are instances when symmetrical triangles mark important trend reversals, they more often mark a continuation of the current trend. Regardless of the nature of the pattern, continuation or reversal, the direction of the next major move can only be determined after a valid breakout of the two trendlines.

Roughly 75% of symmetrical triangles are continuation patterns and the rest mark reversals. The reversal patterns can be especially difficult to analyze and often have false breakouts.

It is possible also to project a price target in case of a break out, there are two methods to estimate the extent of the move; first  the widest distance of the symmetrical triangle can be measured and applied to the breakout point, in this case we have a target of 17$ (closing point of the triangle) plus 8/10$ equal to 25$.
Second, a trend line can be drawn parallel to the pattern’s trend line that slopes (up or down) in the direction of the break. The extension of this line will mark a potential breakout target of 27$ for an upside breakout.

Well, i dont think we are going to do a huge downside breakout, at current difficult level of more then 1.3 million the electricity needed to produce one bitcoin is at least 3$ and even 7$ for people living in europe with higher electricity costs, unlikely that they are going to sell their bitcoins for less then the cost to produce them. In a worst case scenario, without a drop in difficulty, we might see a slow weekly correction down to 8-10$.

Here’s the weekly chart, the alma moving average is slowing down but it does not have reversed its direction.

Short Term Update: MtGox Reopens its doors!

This is a fast update after one full week of halted trading activity at MtGox. For who follow my twitter daily range forecast, here a short explanation on how it works. My estimate of the daily range is computed using volatility, i already explained in the past how i do it; if price stays above the midpoint we are in a strong position otherwise under it the price is in a weak position. It is difficult to have a definitive and reliable estimation of volatility at MtGox and generally on all bitcoin exchanges, because they are small and not enough liquid to provide stability in the price action. For the daily range i publish on twitter i compute levels that have more chances of being hit and may provide a guide for your daytrading operativity. You may also interpret a break out of the resistance or support level here indicated as a strong activity of the market in that particular direction.

Long Term Update: TradeHill Daily Chart

While we are waiting the MtGox exchange to reopen, i’d like to move your attention to what is happening at TradeHill Exchange. The last 3 days have been slightly bullish with price advancing from 12$ to 15.50-16$ with an increased volume activity. The ALMA moving average reversed to the upside but i dont expect a strong upswing with MtGox still halted for updating its systems for strengthening security.

Last official update from Mt.Gox Support Desk says:

We will relaunch the site on June 25 at 3:00 GMT. Trading will resume at 4:00 GMT (same day).

 

Short Term Update: Tradehill

It is interesting to observe how the investors that trade at Tradehill reacted during the MtGox drama. The volume activity is very low compared to MtGox but still insightful, during the big fall at MtGox tradehill followed the drop down to 10, the day after it crashed to 6$ for then recovering close to 14$. I think that when MtGox will reopen we might observe the same phenomenon.

 

 

To use slush plugin “sierrachartfeed v0.2” with tradehill data just run it with the -s thUSD  command line option: sierrachartfeed.exe -s thUSD
Then open in sierrachart a new IC (intradaychart) and load thUSD.scid

Major security breach at MtGox

Yesterday, June 19, at 17:15  (GMT), a big user account and database of MtGox.com was hacked. This includes usernames, emails, and hashed passwords.  If you used the same email or password on MtGox as you did on different other websites, i recommend you to change password in case your MtGox password is cracked from the database.

This is the last official update from mtgox:

[Update – 6:30 GMT] Still here. Still working hard to get things online.

• SHA-512 multi-iteration salted hashing is in enabled and ready for when we get users reactivating their accounts
• We are going to push our relaunch time to 2:00am GMT tomorrow so we have time to launch a our new backend and withdraw passwords

_________________________________________________________________________

Regular market coverage will probably resume on Wednesday, January 22

Thanks

Short Term Update: Dull

OUT OF MARKET | waiting a break out of the narrow range of last 2 days

Dull moment for the mtgox bitcoin market. After two days of repeated denial of service attacks the market moved in a narrow range. I computed for the next 24 hours support and resistance using an halved value for volatility, i’m interested to see also the impact of the recent increase of the difficulty factor (from 567000 to 876000, +54%).

Long Term Update: weekly view

In the last week end we have seen an extremely volatile market that makes me uncomfortable to post my short term trades on a public blog like this followed for the most part by amateurs. With the yo-yo behaviour of the last week end, it is easy for an amateur speculator to get slammed trying to follow the trend. In this situation a better approach is to try to figure out whether current prices are high or low relative to a normal price range. If you can do this you can begin to trade any market with confidence.

I do that, as i explained in one of my earlier posts, computing support and resistance with an estimation of current volatily and the time considered for the forecast (usually from 15 to 25 bars of the time frame used). So if the market goes under your calculated support and then you have a buy signal you may try to “take a stand” or basically telling everyone that you think the market is under priced and telling to other market partecipants that they might have made a mistake by pushing the market too low. So I say you should learn how to take a stand at support or resistance levels also through personal experience.

On a weekly basis, the trend is still up, trading activity is growing and show an increasing volume activity. The weekly moving average is unaffected by the recent wild daily swings, the inverse fisher rsi is still overbought with no signs of weakness.

Long Term Update: weekly analysis

In the last two days the market impressed me; an incredible acceleration from 10$ to 17$ with good volume. Many has asked me to make a forecast about a potential important target, well isn’t an easy task but i’ve decided to do it, so i calculated a potential mid term target using weekly data. Usually a swing, in any time frame (hourly, daily, weekly, monthly) may last up to 25-30 bars with a minimum of at least 4 bars. This weekly swing started from 0.56$ in april and so far this market has risen over the last 9 weeks.
Hypothesizing that this weekly swing will last for 25 weeks, a maximum target would be around ~70$ in october. I’m pretty sure that approaching such an impressive target many big bitcoins holders will be tempted to sell their stake stopping the ride. Can this market go beyond 25 weeks? Yes, but more likley with a weekly correction of at least 3-4 weeks.

Otherwise if the top is now and a weekly correction will start immediately with a minimum duration of 4 weeks, the area around 10$ may provide support attracting long term buyers.

If someone is interested to a further deep explanation on how i derived these targets, let me know it leaving a comment here. Thank you.

Long Term Update: daily view

The old 8.90$ top has been broken these days without much resistance and i interpret this as a bullish indication.
The bitcoin should reach 11$ before mid June at this pace.

Support around 8$, at this stage of the trade, the worst that can happen it’s to stop loss at even, above 7.50. I’m going to don’t touch anything if we will remain above 8$ the next days.