Short Term Update: again congestion

XBT/USD is again in a congestion, i’ve already spoken many times about how to measure a congestion in previous udpates but remembering the Romans saying: repetita iuvant (repeating does good) i decided to repeat again the whole concept of price congestion.

Congestion occurs when four consecutive bars open or close within the range of a “measuring bar”. A “measuring bar” becomes such when its price range contains the opens or closes of at least three of four subsequent price bars. Price movement may be broken into three distinct and definable areas:

  1. Ledges – less than 10 price bars
  2. Congestions – 11-20 price bars
  3. Trading Ranges – 21 bars or more with a breakout usually occurring before the thirtieth bar

Now 20 days are gone without a breakout above or below the “measuring bar” (i consider the measuring bar the one of last 30 June) and we are in a congestion and close to become a trading range. The reported channel upper and lower price level is very similar to our measuring bar, from $595 to $640, I expect a breakout above or below these 2 levels within the next ten days because on average a congestion phase for this market never lasted more then thirty days.
I’d be very surprised to see the price still inside this trading range in August, IMO the odds are for a breakout above $640 considering the underlying trend which is pushing up.

chart

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48 thoughts on “Short Term Update: again congestion

  1. Anathema

    “Congestion occurs when four consecutive bars open or close within the range of a “measuring bar”.”

    Did you mean 11-20 consecutive bars here, otherwise i’m confused.

    1. Enky

      i was generally speaking, you can further distinct congestions in 3 areas: ledges, congestions and trading ranges

      1. Anathema

        Sorry if i’m asking beginners questions, but i’m just begining to learn and i’m trying to make sense of it. You use btc-e as a source. However on bitstamp and bitfinex there are a good few candles that fall outside the range of the big green July 30th candle. Would your conclusion then also not be different if you were looking at those exchanges?

      2. Enky

        I consider that “visit” above $640 a false breakout that lasted a very short time, more or less the analysis is still valid, bitstamp and bitfinex are in a congestion phase, just a bit short because of that small false breakout.

  2. Mike

    The Dell news was totally muted in the Bitcoin price – as was Expedia news. This probably means that If Amazon news hits, we won’t see anything different. This brings me to the question whether Bitcoin as a protocol is going to trump Bitcoin as a currency. I have not seen a good discussion on this topic anywhere. Is it possible to use Bitcoin as a protocol for all kinds of commerce without utilizing Bitcoin in any significant way? Or in the case of Coinbase, most Bitcoin transactions involve very short time of Bitcoin use. Sorry if I seem a bit dense.

    1. George

      At Dell the prices are nominated in USD and NOT in Bitcoin. It means that XBT is acting like a voucher/gift certificate etc… Yes, you still pay witb XBT but the “value” of the goods is still in USD. This is a significant differene IMO.

  3. Arthur

    Thanks Enky, and indeed no harm in repeating basic knowledge every now and then. I’m still learning, so at least this is to my benefit, so thanks again, really. 🙂

    What I noticed is that 24hr trading volume is slowly dropping again on Bitstamp to the 1,600’s, last time some firework started was when it reached 1,000. Let’s see…

    1. croll83

      Talking about volumes… i placed a sell order of 4 BTC on Kraken at fixed price (It’s the actual price, 460€)… it’s more than an hour and still not fulfilled… ridiculous…

      Enky, what do you think about ether? Most Reddit is against it, all talk about scam… I think ethereum has a very big chance to combine with bitcoin to open a new era: voting, smartcontract, DAC/DAO…

      1. Enky

        It is trust based and IMO It can’t be trustless, and no one asking for smart contracts, dunno, i’m not interested and i smell the classic “pump and dump” move:)
        You have to trust the protocol and i trust only bitcoin protocol.

      2. Arthur

        @croll83, I think so too. Bitcoin, MaidSafe (rebuilding the internet and data storage as we know it) and Ethereum (adding Turing-complete tools, lacking in Bitcoin, to the blockchain concept) are in my opinion a golden combination for the future. And Ethereum is extremely open about what they are doing (whitepaper, roadmap, how funds are used, etc.), and gathered huge amounts of people worldwide around them to work on things. Vitalik Buterin, a young and rather brilliant mind in my opinion, is on board. I found all that really impressive, and I see no scam tendencies, to be honest. The only thing that surprised me is why they organize their IPO so suddenly right now, but my guts feeling is that they feel the hot breath of Ripple Labs (who announced a few days ago they are working on a smart contracts framework called Codius) in their neck.

        Only time will tell what will come from the Ethereum plans, but I have high hopes. Keep in mind though that lots of things can be added to the current Bitcoin protocol, making Ethereum possibly useless. Gavin Andresen touched the Ethereum subject recently also. He showed interest in the smart contracts concept, but for the rest he thought Bitcoin already provides many opportunities, enough to silence Ethereum. That’s why I didn’t go full in myself, just with a tiny part of my cryptocoin portfolio.

        MaidSafe is a completely different story, but for the moment, let me leave it like this… 🙂

      3. croll83

        @Arthur I also didn’t went all-in… I bought a full 1 BTC of ether.. I was on Bitfin 2014 and spoke about Ethereum with Nic Cary (blockchain.info CEO).. he also thinks that Ehtereum will be the future (not same opinion about MaidSafe)… In his opinion Ethereum is strictly connected to Bitcoin and because of this, it will need an user base of 3-5 billion of people before this new technology will be largely adopted… I remember wery well his sentence: “Technology built on top of blockchain [Ethereum also] will need big highways.. We are creating this highways right now… so it’s about future…”

      4. Arthur

        Those guys surely know what they are talking about…

        And MaidSafe’s concept is so ambitious and revolutionary, it will take a while to catch on. And Mr Irvine, their CEO, is quite realistic about reaching his goals: he gives it a 80% failure chance, I remember reading somewhere. As we speak, though, they have attracted 650 developers, and that highly impressed me too… So much different from the clone coins that have one or two developers only.

  4. tradeg

    I often read references to “last time”, but considering the previous peaks were done by robots and market manipulation I’m not sure we can expect the same kind of movements now. But I still hope it will rise ! What do you think ?

  5. Arthur

    Oops, one of my posts seems gone… Enky, did you delete it? If so, no hard feelings, it was not really bitcoin related anyway. 🙂

  6. Elie

    sold at 616. set a buy at 596 on bitfinex. but so far breakout is bearish to me. we might be set to retest 560 if this trend continues or shoot up to from 595 to 710. too early to tell.

    1. Elie

      WOW 585 on BTCE! someone sold around 400-500BTC in few seconds. Bearish outlook confirmed for me. I will wait to see 560-580 before buying

      1. croll83

        wow… I was offline for a while… last check was 612$.. do you think it’s a good idea selling all now? High volumes and RSI never been so low (17).. I’m scared we are already at the bottom -.-‘

        thanks for the help…

      2. Elie

        Yes few of my indicators point for buying now but I have revised my buy to $586. We might drop $618- $24 = $554 according to my worse case scenario (retesting the 550-560s). I am waiting also for Enkys comments on this

      3. Enky

        A sudden drop without news, it is always the same story, people get bored and sell and if who lose the patience holds few thousands bitcoin then the outcome is this:/
        The support is highly dependent from the volatility level, $570 $575 as support for now, if violated then it could be something more serious then a quick shakeout.

  7. Elie

    I made 0.42BTC today by selling at 616 and buying back in at 595.5 best trade I ever done. Now I will be monitoring to see if demand will rise, so far still does not look. We might break 590-595 on Bitfinex and go down to 580-585. Also 560-570 are possible. So far all indicators point to a bearish formation… Some people on trading view are even pointing to a retest of the 400s which I do not see that happening with what Bitcoin has accomplished so far with its infrastructure but will see.

    My TA right now points that the down turn is NOT over. So I will have my alarms set in case of a drop tonight.

    Thoughts?

    1. Arthur

      “best trade I ever done.”

      Congrats! 🙂

      My thoughts? 43 of the top 50 cryptocurrencies have lost (sometimes substantial) value, it seems a crypto bear is keeping everybody busy… No idea why!? Maybe they switch to gold and silver?

    1. Arthur

      Why not… So far they received 7,500 XBT, and if they need $$ fast to pay some bills and salaries… These days 1,000 or 2,000 coins will make some impact. However, for sure they will sell carefully because it wouldn’t be in their interest at all to make the market drop.

      I think Enky’s explanation makes way more sense though (“it is always the same story, people get bored and sell”).

      1. George

        7500 XBT is 4,5 mio USD today… Isn’t this a lot _a lot_ of money to build any software within 6 months? How many people are involved in this project and paid from this amount? I bet they will receive much, much more…

      2. Arthur

        It sounds a lot, and maybe it is. However they have approximately 30 people on their payroll, offices in 6 countries (Canada, USA, Germany, UK, Switzerland and The Netherlands) and this money is also for future costs. I’m an IT consultant working in a company of exactly the same size and believe me, such amount (4.5M) would be gone in 1 – 1.5 years. Salaries alone are 2M per year…

  8. Elie

    Sold at 595 unfortunately, Huobi or China is leading the sell off. Next buy is set for me at 570-575. More precisely put mine at 572 on Bitfinex. Were officially bearish and dropped out from the uptrend. All signals are pointing to sell since 2 days ago. I held thinking we’d see the bulls taking over but that unfortunately did not happen.

    1. Arthur

      Yeah, bitcoin choses his own path, obviously. Just read something about ‘trough of disillusionment’ as part of the technology hype cycle, maybe that’s what’s going on. This article has a chapter about it, for who is interested?

      http://www.coindesk.com/market-monthly-stable-bitcoin/

      Such theory would also fit Enky’s predictions of $7,000 – $17,000 for 2017 bitcoin’s price range, I guess. Interesting!

      1. Elie

        i meant slightly bearish in a bull market since we failed to rally past key ATH and start the July 24th bubble. Since the July 24th bubble didn’t materialize some sheep traders got disappointed and sold out IMO and mix that with Ethereum selling 1BTC for 2000 Ether and other stuff (low volume since everyone is on vacation, less demand for Bitcoin etc) you have a slightly bearish market.

        In short we should retest 570-560 range. I believe Enky said anything below 550 is completely bearish. I doubt we will go under 550 but lets keep an eye on this.

      2. Arthur

        Fully agree on what Elie just analyzed. I’m mildly disappointed that TA proved us wrong, however, it is what it is. No demand, no new rich buyers, no volatility, no Mega Bull Run so far. I’ll give it a few more days, and if nothing happens I’m going back to some day trading again in August. Can you believe it, I miss the excitement lol!

      3. Anathema

        You’re all bearish now? That crappy prediction chart i posted a while ago is still following the previous two cycles exactly. If it comes true, the bull run will start in about a week. I will laugh my ass off if my crappy amateur mess of a ‘prediction’ comes true 😀

        I’m too scared to sell now, but i placed another small buy order at $575 just to be sure.

      4. Arthur

        Hey Anathema, you gotta help me out here… Based on your graphs I thought this ‘flat’ period in the 580-680 range would last 4-6 weeks, and maybe a little longer because we dipped below 580 a few times. However, we’re now 8-9 weeks in, so yeah, I’m losing confidence in The Anathema Theory.

        Where did my calculations go wrong? How come we still have another week? Thanks man.

      5. Anathema

        @Arthur
        As someone who is obviously far more advanced in TA than i am (i’ve only just started the course at babypips.com) you should probably pay no attention to those charts i uploaded. But if you want to know where the 1 week comes from, i’m looking at the Bitstamp 3d chart and i used the histogram of the MACD. The previous two cycles had a big green area in the histogram during the high, then a large red area that ends together with the big downtrend, then a green period as price surges up initially. We then have a period of relative stability or maybe a light downtrend, which causes the MACD histogram to go into the red. This red was 3 bars in the 2012 cycle, 4 bars in 2013 and now we have 3 red bars so far, so i figured, as the cycles get longer, it could be 5 or 6 red bars this time, so another 2 or 3 bars (3 days each). In 2012 and 2013 the bull run started on the last red bar or the one before that.

        But to be honest, i’m not so sure about the bull run scenario anymore. although of course i hope it happens. There are many scenarios, a bull run is just one. My biggest fear though is that another currency (Maidsafe and Ethereum are mentioned a lot lately) suddenly takes over and bitcoin price crashes in a few days to never recover. And that scenario is not entirely unlikely, bitcoin does have some problems like the 7 transactions per second, not sure if that can be solved.

      6. Arthur

        “as the cycles get longer”

        Yeah that’s it, that’s what’s missing in my calculations. It all makes sense now.

        I noticed the same when I checked the last doubling of prices before the ATH (all time high), those periods last longer each time too. I should have taken that into consideration for all other parts of the cycle too.

        “bitcoin price crashes in a few days to never recover”

        Won’t happen I’m sure. There’s just too much going on in the infrastructure of bitcoin. I’m actually more afraid that MaidSafe and Ethereum will become victims of the Litecoin and Mastercoin syndrome: after a hype period with respectable price jumps, they will suffer a long and painful decline before they die.

        And if that 7 transactions per second really is an issue, they will either scale the protocol or fix it otherwise. Remember, it’s programmable money. And many clone coins claim to have solutions for many supposed issues of bitcoin, but where are these coins, cap-wise? Nowhere. Bitcoin is good enough.

      7. Elie

        The 7 Transaction per Second Limit was a cap put in purpose by the Bitcoin Developpers, it will be removed in due time when Bitcoin has a bigger market cap etc.:

        Today the Bitcoin network is restricted to a sustained rate of 7 tps by some artificial limits. These were put in place to stop people from ballooning the size of the block chain before the network and community was ready for it. Once those limits are lifted, the maximum transaction rate will go up significantly.

  9. Im not sure about being back in the bear market but possibly the New York regulation has disappointed many within the community, a lot of uproar about this circulating around Reddit.

  10. Elie

    Seems I was right afterall, BTCE just hit 564 😉 as I forecasted. All other exchanges are crashing down too.

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