Long Term Update

BTCUSD Monthly Chart KAMA Average 5 periods and deviation lines.

Since the last update on February 13 there are not many new developments. The monthly KAMA average is flat, which allows us to calculate fairly reliable levels of support and resistance. As you can see nothing interesting happened with the BTCUSD cross that remains inside the supports and resistance levels (yellow lines).

I have added a new indicator that calculates supports and resistances using as a starting point the close of the previous month (with the idea to forecast next month support/resistance levels), in this case the close of February at about $ 10300. I have used the last 50 months, just over 4 years from the bear market’s lowest point in 2015, to calculate volatility.

The drop we have seen in recent days has reached an intermediate level, -1.5 standard deviations, so I can say that there has not been a level of extreme volatility but not even normal.

My opinion is that the bitcoin will continue to remain for most of the year within the levels calculated with the KAMA (yellow) and therefore remains a good opportunity to buy the price area from 4000 to 5500 dollars, while it is to be evaluated a reduction of any bullish position should the BTCUSD go above 25 thousand dollars.

I also give you some short term indications for the next days, the first resistance is $9500, you might see a Top not exceeding $9500 before the BTCUSD resumes its descent. A break above $10000 would mean that at least in the short term the bearish trend is over.

 

ITA Version here

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Long Term Update: Bottom Done Yes or No?

On 18 January 2018, I wrote that the bottom was probably done but I hinted that at the break of the same I would have closed my long term position, unfortunately there was a subsequent very strong selling activity after a weak reaction from the support of the weekly chart (at about 9500$). In these cases it is useful to scale the time frame to the next one (from weekly to monthly), so i applied the KAMA average and its deviation lines to the monthly graph instead of applying them to the weekly graph.
The resulting graph is this at the moment and the market has reacted strongly from this support area.

monthly chart btcusd
BTCUSD Monthly Chart – Kama and deviation lines

You can see that the first deviation  line has hold the price from further lows at the end of the 2014-2015 bearish market, the same negative deviation line reported to date is at about $ 5300 and the market, for now, has done a bottom at $ 5900. I’ts difficult for me to say if the bearish market started in December 2017 is over, I remain convinced that we will hardly see stable prices under $3900 and that the support area from $3900 to $5300 will be very strong for this year.

If during ther year the trend of the Kama average becomes bearish from flat we will have a confirmation that a down trend, even on the monthly chart, has been established and this would undermine a little the validity of the support area indicated in the chart.
For now I think that the market is still stronger than the 2014-2015 period and that any medium-term correction should be above the indicated support area.

Italian version here.

 

Long Term Update: Bottom Done.

kama
Kama Average and deviation lines – XBTUSD weekly chart

This is the main template I use with the tradingview platform, it is a weekly XBTUSD chart with the Kaufmann moving average I modified by adding the deviation lines.
These deviation lines have been appropriately calibrated according to the volatility of the underlying asset.
As you can clearly see, the market has never tested the second negative deviation line and has always reacted from the first line.
So it was also yesterday after a minimum at 9200$ where a strong reaction took place up to 11600$.

I think that this market is headed well above 20000$ in the upcoming weeks/months, for completeness a possible bearish scenario would imply first a drop down to 7500$, a subsequent reaction to 9500$-10000$ before resuming the fall to new lows. This possible bearish scenario would convince me to liquidate all the bitcoins i bought in 2014-2015. As long XBTUSD stays above 9500$ i’m not worried for my long term position.

Weekly Range Update: CBOE/CME is coming!

bitstampUSD 1 Day #1 2017-12-10 23_03_45.582
XBTUSD Daily Chart

XBT/USD weekly price range 11500$-19100$ | The resistance zone for this week is very wide but less than the previous week and ranges from 17500 to 19100 dollars, the support area around the 2nd deviation line, from 11500 to 11300 dollars.

Clearly, intraday volatility from tomorrow will increase due to the impact of CME and CBOE futures, so there may be very good buying opportunities if the price were to fall below $11500 for short periods of time. Given that the arrival of derivatives is not an unexpected news and I don’t expect any kind of impact on the current bullish trend, what we will see will only be an increase in intraday volatility as already proven in the past by academic studies.

Also this week to compensate for record volatility levels I refined again the coefficients to calculate the various VWAP deviation levels so as to have greater consistency with other indicators I use.

The RSI oscillator is always clearly overbought even if it has downloaded a little while keeping always above the threshold of 70; as long as there is this great force this oscillator will remain constantly above 70 and therefore it must always be contextualized the reading of RSI according to the condition of the market, today still in extreme force.

In the event of an unexpected catastrophic news, the support area on the weekly chart rises to 4100-5300 USD.

ITA Version here

Weekly Range Update: again at resistance

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XBTUSD Daily Chart – VWAP Levels

XBT/USD weekly price range 10500$-14400$ | The resistance zone for this week is very wide and ranges from 12000$ to 17000$ and is defined by the 2nd and 4th deviation line, we start the week again near a resistance but I think it is possible to reach 14400$ with a maximum peak at 17000$ eventually the week later near the CME bitcoin futures debut.

To compensate for higher levels of volatility I have increased the coefficients to calculate the various levels of VWAP price deviation lines so as to have greater consistency with other indicators that I use to compute volatility, supports and resistances; all this to ensure a good correlation between the different approaches I use.

We are very unbalanced to the upside and I don’t expect significant declines for this reason the support area is more narrow and ranges from 9250 to 10500 dollars just above the 1st deviation line.

The RSI oscillator is always clearly overbought with its average being saturated well above the threshold level of 70; these two conditions do not preclude a further push of the market at $14000 and until I see a slowdown on the weekly chart I will continue to ignore this oscillator.

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to 3600-4500 USD.

ITA version here.

Weekly Range Update

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range 6800$-8600$ | This week the 2-month VWAP updates to 6100$ from last week’s 4800$; new data is replacing the old ones and it may happen that you have some slight changes on the price level of the reference average.

The resistance zone ranges from 8600$ to 9800$ and is defined by the 2nd and 3rd deviation line of the 2-month VWAP.

The support area ranges from $6100 to $6800 and is defined by VWAP and an intermediate level between the VWAP and the 1st deviation line.

I think it is very difficult to see a test down to the VWAP at $6100, if there were to be some profit taking the market should not fall below $6800, considering that the RSI oscillator turned upside without testing the oversold area i still believe that this market will go over 8000$ eventually after a small correction towards our first support at 6800$.

The other template I use on Tradingview with KAMA average and deviation levels is very similar to this one; the weekly KAMA is at 5800$ not far from the 6100$ of the 2-month VWAP.
The resistance zone is 8000$-9300$, slightly lower than the one presented with this update of 8600$-9800$.
Basically we have a decent correlation between the two templates (VWAP using Sierrachart and KAMA using Tradingview. com)

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to 3200-4000 USD.

ITA Version Here.

Short Term Update

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Updated Weekly Range Levels

Given the good price reaction from the 5400$ bottom, I decided to update the price levels for this week to 6250$-7600$ with an extreme to $9000.

As I often say, the higher the bottom, the higher the chance is that the following top is very high and could be between 9000 and 10000 dollars, we have seen that the market almost never reaches the fourth VWAP deviation line so let’s say that a good top could be around 9000$.

The ALMA moving average isn’t yet bullish but it’s close to reverse its direction while the RSI failed to reach oversold territory and this means that the market remains very strong despite all the FUD of last week.

 

Weekly Range Update: returning to the mean.

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XBTUSD Daily Chart

XBT/USD weekly price range 4800$-6200$ | The resistance price area run from $6200 to $7600 and is defined by the 1st and 2nd VWAP positive deviation line.

Last week I had hypothesized a correction down to the support zone between $6500 and $5400, so it was with a minimum at around $5500. I honestly expected less bearish pressure, but it is a long time that the XBTUSD cross does not return to the mean, our 2 months VWAP.

I think the correction is not over yet, most probably it’s time to test the 2 months VWAP which now is $4800. I think it is very difficult to reach the $3300 or the first negative price deviation line, this has not happened for many many months and such a drop might also help bitcoin cash to surpass bitcoin market cap, an event that could frighten the bitcoin community. Despite my personal bias about BCH I still own a part of the bitcoin cash obtained with the fork; for now I don’t sell them to help diversify my investment in cryptocurrencies during this period of high volatility and uncertainty.

The RSI oscillator would suggest a decrease but it is to be seen if it succeeds in bringing itself below 50, even here it is worth the same discourse done for the VWAP, it is a long time that the oscillator does not go into oversold territory so I would not be surprised to see it in that area during the week.

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to USD 3100-3700.

Many will think that the unexpected catastrophic event was the attack on bitcoin by some market forces, in this perspective I tend to disagree because we are very far from the support area calculated with 6-7.5 standard deviations. What we are seeing are the normal market forces at work among themselves, the strongest will win as well as in business in the end remains always and only one winner after a strong fight without mercy.

ITA Version here.

Weekly Range Update

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range is 6500$-7600$ | The resistance zone ranges from $7600 to $8700 and is defined by the two deviation lines furthest from the VWAP.

I think it’s time for a correction to the first support located at $6500, the buying area for this week is from $6500 down to $5400. I think it is very difficult to reach $5400, a minimum at $6500 is much more likely and would not compromise the possibility to see a new ATH this week.

As explained many times in the past, it is important to look at where bottoms and tops are located to understand in which direction is headed our cross XBTUSD , given the great strength of the last two weeks it would be more consistent to have a minimum at $6500 rather then $5400.

To conclude the first level to observe is $6500, the next $5400 and without unexpected negative news it’s very unlikely this week to test the VWAP at $4350.

In the event of an unexpected catastrophic news, the support area on the weekly chart is updated to 2250-2875 USD.

Since many people asked me more details about these extreme price levels, I want to spend few words on how the support area is calculated in case of a strong drop due to unexpected negative news. I use the last 52 weeks to calculate bitcoin volatility and starting from the closing price of the previous week I project two support values using 6 and 7.5 times the initial value of the calculated volatility. In the past I have explained the concept of the “six sigma”, which concerns the construction quality in industrial processes and I have applied it in this field to calculate support levels and resistance levels which are practically inviolable and which obviously only apply for the current week.
A value of six times is used, with an extra tolerance of 1.5, to arrive at a maximum deviation that uses 7.5 times the initial volatility.

ITA Version here.

Weekly Range Update

XBTUSD dailychart
XBTUSD dailychart

XBT/USD weekly price range 5350$-6600$ | The most obvious thing for this week is that the XBTUSD cross will spend most of the time in a sideway movement between 5350$ and 6000$ considering that it comes from a rise with a strength never seen before since I follow bitcoin.

The buying area is the same reported in the previous update, ranging from 4700$ to 5350$, the resistance zone from 6000$ to 6600$.

The RSI oscillator and its average are both overbought as logical after the sharp rise seen in recent days. I believe that this will be an interim week with the price remaining between 5300 and 6000 USD, so I think a strong bearish movement is unlikely to push bitcoin down to the 2 months VWAP , now at 4100$.

In the event of an unexpected catastrophic news, the support area on the weekly chart rises to 2400-3100 USD.

ITA Version here.

Weekly Range Update: Yikes!!

bitstampUSD 1 Day #1 2017-10-13 08_18_24.109
XBTUSD tested VWAP 4th deviation line for the 1st time ever in its history

Updated weekly price range is 4730$-6600$ | It is interesting to note that the cross XBTUSD after two days of hesitation exactly on the second deviation line of our 2-month VWAP average then violently broke the resistance level to reach for the first time in its history the fourth line of deviation of the VWAP , this is a phenomenal sign of market strength.

Theoretically, the point where it broke the second deviation line (4800$) should now serve as a support in case of a price retracement but it is more likely that for the next two-three days the support level will be the third line at 5350$.
For who sold before these insane price levels it might be wise to enter again between 4800$ and 5350$.

Should the price levels, mentioned in this update, changes significantly I will keep you updated with Twitter.

ITA Version here.

Weekly Range Update

bitstampUSD 1 Day #1 2017-10-09 08_23_50.183
XBTUSD Daily Chart

XBT/USD weekly price range unchanged at 4300$-4800$ | The two bearish days of the beginning of last week had let me think that we would be back towards the 2 months VWAP  then from last Wednesday the market has returned to its original trend. These occasional weaknesses may indeed last a few days and then revert back to the original trend, which is currently on the rise.

The resistance levels remain unchanged for this week as well and are shown in the graph at 4800 and 5250 dollars.

The RSI together with its moving average have entered the overbought zone, before using this oscillator to open a bearish position, it must be confirmed by some pattern of reversal that at the moment I don’t see leaving therefore a margin for an eventual rise to 4800$.

Some of you often ask me about Bitcoin Cash, I had a support to about 0.080 but it was broken, the next support is at 0.058 which is a triple bottom along with the bttoms made on 6 and 16 August ’17. In general, Bitcoin Cash is clearly bearish, however in case of a strong bullish spike the first resistance is at 0.107

In the event of an unexpected catastrophic news, the support area on the weekly chart rises to 2200-2700 USD.

ITA version here