Short Term Update: VWAP test

chartYesterday there was the first serious profit taking by investors of this strong advance in price started in late September. In these cases it is very important that the average VWAP stop the fall of prices and in fact it worked perfectly despite the large volumes that occured at Bitstamp , about 50000 bitcoins .
At this point it is very important to stay above 270 dollars and possibly to react from here up to the second statistical deviation line of the VWAP located at 410 dollars,it would be a good top for November. It takes a lot of strength to go up further and it is very likely that we can drop during the next week down to $ 200, which i consider a very strong support and very important not to violate it.

For now I am waiting for further developments before taking a decision for my open trade , in the case of a break of $ 200 i will be practically forced to close the position to avoid to violate a fundamental rule of trading : do not to allow a profit to turn into a loss; it is very easy to fall in this mistake in a volatile market like this where winning trades can quickly turn into losses.

See you at the next update, and good trading .

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12 thoughts on “Short Term Update: VWAP test

  1. krolls

    Hey Enky, just to make sure I understand, you believe it could rebound to 410 but instead it is very likely it will continue its downtrend? Or do you think it will reach 410 first before doing that? Thanks.

    1. 2 scenarios krolls. looking a weekly chart the odds are for a correction but it is not a perfect science technical analysis, i’ve learned in many years that most of the time the market surprise you.
      I think that if VWAP will hold at 270$ btc can reach 410$ then retrace. IF vwap will not hold as i tend to believe, then it will fall down to 200$. Short term monthly vwap is a good tool to understand the tendency of the market, if above bullish, if below bearish, so far it remains bullish this market.

      1. not much retracing, as usual in case of a profit taking the first important support is always the volume weighted average price (VWAP)

  2. Hade

    Hi, I have been looking into BTC recently and plan to invest soon. So what you are saying is that if the VWAP doesn’t hold, then we can expect a price drop to around $200 and that would be a good time to buy in?

    Many thanks

    1. Yes, but so far price is above vwap and moving towards a new high.You could enter this market with half position now and if a drop occurs enter with the remaining half, at least with this strategy you don’t risk to stay completely out while the train is departing without you:)

  3. Kelvin

    Hi,

    Firstly, thank you for your insightful blog. I have learnt a lot. I am a first time trader so please bear with me

    Secondly, I have read somewhere that this seems like a bubble :

    From the charts, it does seems like it. What are your thoughts? Do you think it is? or are there some things we should look out for before determining whether this is?

    1. I think that it is hard to judge if it is a bubble or not, because i don’t have a valid model to perfectly price bitcoin intrinsic value.
      My opinion is that we are in the takeoff phase, with institutional investors still out of this market althought some important fund managers are watching carefully bitcoin and i think that soon they will finally jump aboard.

  4. Fortis

    Hi. When you were talking about second statistical deviation line located at 410 dollars, did you mean bitstamp or mtgox? Thank you.

    1. Bitstamp, i abandonded gox even if I could use it for long term analysis because of the availability of historical data since 2010

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