Long Term Update: approaching resistance area

download
Weekly Chart XBTUSD composite index of 7 exchanges

I include in this long-term update the template I mainly use with the tradingview platform that includes my KAMA average with deviation lines tuned for XBTUSD currency pair.
You can see that this currency cross is entering an interesting resistance zone ranging from 3200 to 3900 dollars; I included in the chart also the 2 months VWAP average and the 1 year too.
The average VWAP at 2 months is slightly above the 5 periods KAMA average while the 1-year VWAP is slowly rising and has come close to the negative deviation lines, around 1260 dollars.

It will be interesting to see the behavior of the next few weeks to see if this rise is just a spike or a solid trend, in the latter case it could mean that this year we could also see prices over 4000$, to understand this we will have to wait at least four weeks or this month.

Price range for this week is 2950$-3450$ with ALMA average firmly up and the RSI oscillator not yet overbought.

Long Term Update: Weekly Price Channel

weekly_chart_xbtusd
Weekly Chart – Price Channel

It seems that a correction has started on the weekly chart although the ALMA average is still bullish and not yet 100% confirming the move; sometimes a return to the mean or average is healthy for an uptrend, here the level is around 825$.

First deviation line is 650$ and the second one 530$. I fail to see an event strong enough to increase the volatility level so much to push this pair down to 530$, i remain confident that it’s not going so low and that the 650-825 usd price zone is a good support for long term buyers.

It is needed a close of this weekly bar above 1030$ to avert the risk of a correction of some weeks. The weekly RSI is above its mid-line or 50; in a strong uptrend the RSI usually stays above it as XBTUSD is doing since october 2015.

Weekly Top Estimate

weekly
In the previous update of 18 November I wrote that I would have expected a weekly Top in the price area between 770 and 910 US dollars. This week the cross xbtusd did a strong acceleration with an up movement of more than $ 80; these large movements concentrated in a single week can move the price regression channel that i use with MetaTrader 4, especially if they happen in a single price bar. The indicator adapts to new information that comes in projecting new supports and resistances levels with the effort to obtain a better fit of what is happening.

The new resistance zone ranges from $820 to $970 but you have to consider that if this week bitcoin price will continue to rise with this strength even this new resistance area will change again.

For those who are anxious to take profit or go short I strongly suggest to wait and see where this currency pair will form the next congestion zone on the daily chart.

For my italian followers here’s the italian version at bitchanger.com

Weekly Top Estimate

Weekly Top Forecast
Weekly Top Forecast

XBTUSD cross has finally break through the first resistance above the mid-line of the price channel now at $640, same price level of the 2 month VWAP. In the attached chart I highlighted the price zone where I expect the next top will fall.

I believe that the next top will fall in this price zone, precisely between 770 and 910 US dollars; because of the long-term trend still up i think that bitcoin could make a maximum higher than the previous one of June, it is not excluded a Top around $ 900 as shown in the weekly chart.

What if i’m Wrong

It exists the possibility that i’m wrong if the dominant timeframe isn’t the weekly.
So what? Well we can switch to another timeframe for example the monthly chart. Here the price channel is much wider then the weekly chart, midpoint is at around $500 usd and the two positive deviation lines are at 870 and 1500 usd. Again we have a resistance similar to the weekly chart, around 870-900.

In order to prove that my weekly scenaro is wrong XBTUSD have to break above 900 usd with strong volume, as you know a High-Volume Breakout signal a move higher possibly to $1000 and beyond.

Long Term Update: Weekly Chart

grafico-settimanale-xbtusd
Weekly Chart XBTUSD

In recent weeks the XBTUSD cross has finally accelerated to the upside after an accumulation period lasted two months, now it has reached the first resistance of the bullish price channel based on the weekly chart.

This area of resistance starts at $ 750 and ends at $890. I believe that the next top will fall in this price range, precisely between 750 and 890 US dollars. Because of the long-term trend still up i think that bitcoin could make a maximum higher than the previous one of June, it is not excluded a Top around $ 900 as shown in the weekly chart.

For those unwilling to risk it is not wrong to take profit at these price levels and eventually reopen the position once the $750 resistance level is broken.

Italian version here at Bitchanger.

Long Term Update: Weekly View

eng
XBTUSD Weekly chart with price regression channel

This is a weekly chart since the bottom of March, 2015; the underlying weekly tendency is still up since then.
Inside this long term up channel there are secondary tendencies or cycles clearly visibile and highlighted by the alma moving average.

Last up cycle ended on the top just outside the high volatility zone in June 2016. After 3 months we are still in a secondary  down cycle inside a big up cycle. As i’ve told you in previous updates the maximum extension of this down cycle is at $420 as indicated in the above chart, i doubt we will see weakness below this important level.

At the moment the price is exactly at the middle point of the price regression channel and it’s very hard to say which direction it’ll take, in any case if there will be a new crash down to $420 i’ll further increase my long term position; at the same time if XBTUSD start to stay consistently below $420 i’ve to conclude that the long term up cycle is over and a bear market is ahead.

As i’ve said many times in the past years i don’t believe in a prolonged bear market because bitcoin and its network are healthy and just at the beginning of their life. Key is patience.

Offtopic: Cacoethes scribendi

“Cacoethes scribendi” or translated from Latin to english “a burning desire to write”, writing always of bitcoin sometimes is boring, today i show you the template i use with metatrader 4 applied to other assets like stocks, indexes and altcoin.

I already explained that an idea that i like is to do a price regression of our asset using a filter that eliminates all cycles below 30-40 periods with the intent to extract the underlying long term trend, then you can try to earn some money trading the secondary cycles that move the price up and down inside the price channel.

SP500/N100 weekly chart

sp500

Mid channel line color is white thus this market is neutral the ideal situation to trade the price levels, at the moment there could be a short opportunity, stoploss above the dotted positive deviation line.

n100

Similar situation for the nasdaq 100 index.

GBPUSD

gbpusd

The big drop of the Brexit is clearly visible, the pound should stay above 1.29, it’s the moment to buy with a stoploss below 1.28

Nikkei 225

nikkei225

Nikkei is short for Japan’s Nikkei 225 Stock Average, it is a price-weighted index comprised of Japan’s top 225 blue-chip companies traded on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the United States.
In this mothky chart is visibile the big rise fueled by the quantitative easing of the Japan Central Bank and the subsequent drop after flirting with the resistance at 21000.
At the moment it is holding above the first negative deviation line, i don’t see any trading opportunity.

Tesla

tesla.png

On the weekly chart the tendency is neutral, midline color is white, ideal to trade secondary cycles like the one that pushed down Tesla below 150 usd and below our support, a very good trading opportunity, it is possible also to trade the dotted levels but they are less safe.

Ferrari

ferrari

Daily chart of ferrari (RACE ticker), after an interesting double bottom on the support this stock trended higher above the resistance after the earnings.
I think we are seeing a buying climax and in this situations is smart to sell the good news, i see a short trade opportunity here but it’s wise to wait some weak signals from this stock before going on.

Nintendo and the Pokemon Go Bubble

nintendo

No comment here, the bubble is evident but this stock is still hovering above midline and the long term trend is bullish. Again a nice double bottom at the support.

Apple

aapl

Last five years of Apple in this monthly chart, here the support levels worked almost perfectly. Apple is losing some steam as the midline color is white, neutral long term tendency despite you can see a sequence of higher highs and lows. The stock reacted from the dotted line at around 90 usd but i’m not sure is going up yet, the trading opportunity here is a test at 75-80 usd this year or the next one.

ETCUSD – Hourly chart

etcusd

Hourly chart of ethereum classic, again bubbles are clearly visible. Some congestion outside the upper solid deviation line it’s the warning signal, be prepared to open a short. Now volatility is a bit lower and this altcoin is moving inside the dotted deviation lines. I see a buying opportunity once 1.85 usd is tested.

Conclusions

This price channel indicator is an improvement of the classic bollinger bands indicator, what i don’t like of the bollinger bands is the wrong way to compute the upper and lower bands that might lead to very misleading values sometimes as i explained at the end of this old article. To keep things simple i omitted to include some timing indicators, for example adding the Walter Bressert DSS oscillator with ethereum classic we have:

etcusd+dss

Clean cycles togheter with a correct approach to spot support/resistance levels and you have a decent guide to follow. This oscillator is configured using 9 periods and 5 periods for a second pass smoothing.

 

 

Long Term Update

This is a template i use with metatrader 4 where you can see a price regression channel. Yellow line is the same average i use on sierrachart, ALMA moving average.

weekly
Weekly Chart since October 2013

The dotted deviation lines are calculated using the volatility derived from the average true range indicator. The solid deviation lines are calculated with the same approach but using two times the value of the average true range. Most of the time XBTUSD stays inside the dotted deviation lines but during period of high volatility it moves towards the solid deviation lines as happened in the last Top of June at $780.

With the bitfinex flash crash XBTUSD tested the first lower deviation line at $475 although on some exchanges the bottom touched $460. I don’t think is over yet, there might be a secondary reaction that can last all this month and maybe part of September with a test of the lower deviation line, this price level is near $400 as indicated in the chart.

The color of the mid-channel line represents the strength of the trend, red if bearish, white for neutral and green if bullish, at the moment the main trend is bullish and it’ll not change if XBTUSD doesn’t move below $400 for a prolonged period of time. I’m not going to liquidate my position as soon XBTUSD stays inside this long term bullish price channel.

As usual this article is available also at steemit.

Long Term update: Static Resistance

Monthly Chart

monthly

This is a simple monthly chart since Jan.2012, important facts are:

  • Accumulation zone #2 is above previous one, #1 in the chart
  • The static resistance at $680 is also the 50% of the price swing from the all time high down to the 2015 bottom at ~$150

As i explained in past updates the midpoint or 50% it is one of the strongest and most important resistance/support level. The main trend is obviously up (at least so far) because the low around point 2 in the chart is above point 1 thus is legit to expect a new all time high if this market can break above the $680 static resistance.

Furthermore the fact that the two accumulation zones highlighted in the chart never overlap tell us that the underline long term trend is very strong and because of this i expect a new all time high in case of a strong breakout above $680.

Forecasting resistances

btcusd-mn1-simplefx-ltd

This is a template i use for long term analysis with metatrader 4 platform, first i compute a price regression with 12 or 24 bars/months with a monthly chart then i compute supports and resistances. Dotted lines represents supports/resistances using the recent volatility of XBTUSD, non-dotted lines are levels computed using twice the value of recent bitcoin volatility.

We are exactly at the resistance and this is very interesting because in 1-2 months we will see if bitcoin long term trend is still up or not.

I have taken in account the log-normal distribution of price otherwise i’d have had very bad results in computing the levels, usually it is not required but when prices movements are so high you have to. What does it mean? It’s simple, before doing any calculation first compute the natural log of the price, do your stuff and last reexponentiate the data to have back the price chart with a linear scale.
This is why i do not recommend to use standard bollinger bands with bitcoin on a long term chart, you would have bad results, sometimes with the lower bollinger band going negative! clearly unrealistic.

 

 

 

 

Volatility is back and in the right direction

XBTUSD touched my weekly resistance at around $480, i think this resistance is temporary and considering the huge amount of volatility increase there are chance to see higher prices ahead. It’s time to switch to a weekly chart to better understand where is the first decent resistance .

chart-xbtusd-weekly

Above you can see a weekly chart of XBTUSD using an average of 5 exchanges. I plotted the bollinger bands and highlighted 3 breakout bars on point 1,3,4.

XBTUSD did a first breakout bar above the upper bollinger band on mid July 2015 (point 1 on the chart) but immediately turned back inside the bar, typical bearish pattern. At this point a bearish reaction started and ended at the lower bollinger band (point 2 on the chart) .
From here the true movement started with a clean breakout bar (Nov. 2015 point 3 on the chart).

Now we are seeing the same breakout bar (point 4 on the chart) but i can’t say yet if it is a legit or a fake one. Judging from what happened since Jan of this year with XBTUSD doing a long sequence of higher lows i’m tempted to say that this market is strong and probably it will break above 500 dollars; the next 1-2 weeks are crucial to see if this breakout is valid or not.

In january i was telling you that a good resistance for the whole year was $760 and it is still valid, there is 1% possibility to move above $760, 5% to go above $630 and 30% to pass $550. In case of a strong move above $500 the possible targets are these.