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Bitcoin - Price Behaviour

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Bitcoin finishing positive on Sunday evening but it really needs to surpass $10k and this is proving rather difficult. 

Positive news will be required and the typical media spin with a bit of pump as without this Bitcoin just won't have the legs to move towards its recent all time high. 

It has managed to move above $9k but needs to clear $9.5k otherwise it could be a bearish signal. 

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Based on the 'daily' Bitcoin is still in bearish and downward territory unless it can break through the current trading channel it finds itself in based on the price action. 

Bitcoin_20191112_07_11.thumb.png.7e48c0b3203b5d5f6cf3db2187a1fdd6.png

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It seems Bitcoin is continuing its downward bias. Another pattern some of you will have noticed is that when indices are falling so too does Bitcoin and when indices are positive so too is Bitcoin. This infers a correlation between indices and Bitcoin. 

Bitcoin is a typical 'Risk On' trade where as Bonds and Gold are a typical 'Risk Off' trade. This tells me that Bitcoin is no where near behaving like a 'safe haven' asset or like 'Digital Gold'. That could take many years / decades if it happens at all. Bitcoin as a Digital payment method across borders seems like where it wants to go. Whether it gets there who knows.

Right now Bitcoin is bearish but my experience has taught me with Bitcoin that it can reverse sharply when you least expect and catch you out. Monitoring the price action is the only way to be in tune with Bitcoin. 

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Ignore the lines as I appreciate they are not accurately drawn but the point I am trying to articulate is that overall since Bitcoin's all time high the 'daily' is showing Bitcoin still technically in a downtrend.

Bitcoin_20191117_09_34.thumb.png.1200c4a298bb5c753325565ea21ad295.png

Now to counter this there is something in the chart above which suggests that there is the potential of a longer term reversal. This is that that '2nd Downtrend' is higher than the '1st Downtrend' which is a signal for longer term bullishness. This may not end up being the case.

I think if we look at the length of time the '1st Downtrend' lasted and then came a move upwards then if we look at the '2nd Downtrend' and look at the length of time of the move upwards after the first one then it could be that we are looking at around January 2020 for the real upward move in Bitcoin to materialise. 

The first downtrend lasted around 12 months followed by an upwards move which lasted around six months. If the current downtrend lasts around six months then we could see a three month upward move before the halving event before another sharp correction, drop, profit taking move occurs.

This is just an 'assumption' which needs to be tested by the price action of Bitcoin. There is absolutely no guarantee that anything I have suggested may happen. It is just my thought process currently which I am sharing. 

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There is still a chance that Bitcoin could try and re visit the $6.3k to $6.6k price area. That is my price area for any potential bottom at this moment in time and it may be that Bitcoin needs to go down to that level before it can begin its next big move upwards prior to the halving event. 

We know that Bitcoin could hit that price point in 2-3 days from this price area and it would not be unexpected if Bitcoin went down say 10% or even 20% in one day.

Expect the Unexpected and then you will be prepared. 

 

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Bitcoin looking very bearish and it seems if $8k is broken then it could entice further selling pressure and a more amplified move downwards. Overnight Asian trading should be interesting. 

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Bitcoin seems to be moving like the Golden Monkey in His Dark Materials - Unexpectedly and Viciously. 

It is holding $8k for now but for how long? $10k looks a distance away but all it takes is a 20% - 30% rise within a week and Bitcoin is back above the $10k price levels. 

It seems to be a slow and laborious move downwards at the moment. 

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Well Bitcoin broke $8k and is currently around the $7.5k price area. It is not looking good at all. 

It seems my $6.3k - $6.6k price area which I think could be the bottom or this specific downward move looks more likely now. I mentioned this price area on Monday (a few posts above) and now I think unless there is some serious buying or spectacular news followed by some serious pumping and short covering then Bitcoin is heading towards this price zone. 

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If you look at my previous posts then you will see that I felt Bitcoin could head down to the $6.3k to $6.6k price level and the chart below on the 'daily' highlights this. 

Bitcoin_20191123_13.43-2.thumb.png.91d55c66b832594cd1ba973a608743ec.png

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@elle,

It sure does seem that way. The only difference from a fundamental perspective is that the narrative of the 'halving event' could change this pattern. I do not know that it will but there is a possibility based on the underlying and longer term pattern of halving events. Only time and price action will tell. 

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I am expecting a 'fat finger' style flash crash which takes Bitcoin into the $6.3 to $6.6k price territory before a flurry of buy orders are triggered pushing Bitcoin back upwards again.

This is what I am predicting based on my 'gut', 'instincts' and past experience. Of course I could be wrong but I am just sharing my inner feelings with the IG Community. 

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There you go, Bitcoin, has hit $6.5k. Now the question is whether it goes into my 'red zone' and touches around £6.3k. I think now any breach of $6k is going to be troublesome for Bitcoin. There is another price area around the 

Critical point coming up for Bitcoin now.

Bitcoin_20191125_05_21.thumb.png.41f2a9943746037d61eb490d3c382e5e.png

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It seems that Bitcoin may be oversold. We have witnessed a deep and sharp correction. When looking at the 'Money Flow Index' (MFI) on the 'daily' then it is very rare that Bitcoin stays below 20 for any length of time.

I have included the chart below to illustrate this point. So it seems likely (no guarantee) that Bitcoin could move upwards from here.

Bitcoin_20191126_06_58.thumb.png.c8984399680b734888b901ad8cf2ec56.png

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I am expecting a small price rise (flurry of sorts) in Bitcoin. If you look at the chart below then when we have seen similar patterns emerge 'red ovals' then it has been followed by a small price rise. I am not suggesting this is definitely going to happen or it is a stone iron guarantee but it is just something to think about and consider for those shorter term traders.

Of course the price action will either confirm this or blow this theory out of the water and we shall all find out shortly. 

Bitcoin_20191126_19_31.thumb.png.92c900790e724442271dd96bfa248e24.png

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There comes that expected small bounce. Bitcoin went from around $6.8k to $7.3k so there were 500 points on offer just today. Also with leverage this could have been a very nice short term / day trade. 

Bitcoin_20191127_16_27.thumb.png.1794f1f271b82e53bdd306dabcbb9e20.png

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Bitcoin hit $7.6k and is full steam ahead right now up over 6%. I could feel this move based on my past experiences, gut instincts and just watching the price action. 

I think Bitcoin will go for $8k. We may even see $8.5k but it all depends on how much profit taking goes on with the short positions, stop losses being triggered and buyers coming in and overpowering the sellers. This could easily be a strong short covering rally before the downward move continues or the start of the big rally some have been waiting for and anticipating. For that I think Bitcoin would need to clear $9.5k to $10k before I though that was a realistic proposition from here. 

 

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I was looking at the 'Fear and Greed' index for Bitcoin. I think sentiment is not strong as some traders are not sure if Bitcoin has actually hit its bottom in the $3k range around 12 months ago. Sentiment is showing in the 'Fear Zone'.

From a 'Contrarian' perspective Sentiment can only improve unless Bitcoin makes a new low below the $3k range!

I see Bitcoin having a real good go during the US Thanksgiving period at $8k whilst other assets will be taking a break. 

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When I look at the downside risk of Bitcoin then it is far too great at this moment in time. Reports are suggesting it could fall to $2.5k and of course none of us know for sure that it will but that risk is a possibility when you look at the longer term trend, past bubble behaviour and the possibility of 'MEAN REVERSION' on a longer time frame horizon. This is a real downside risk for me and it cannot be ignored. 

Bitcoin_20191201_09_54.thumb.png.7ee0ce4f33a5557933f7ef45ed2eccad.png

I think we all are going to know a lot more about the future price of Bitcoin come May 2020. Will Bitcoin's price behave the same as it has done historically or will new patterns and behaviour emerge?

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It does not seem like Bitcoin has bottomed on this latest correction from $12k - $14k. I think consolidation will be very important as without this there is no foundation from which Bitcoin can move up. 

I would much rather see slow and steady rising in price than a the speculative and parabolic moves we have seen historically. If Bitcoin can change such historical trends and behaviour into a more robust and solid trend then it will bode well for Bitcoin. It needs to reduce its volatility so that institutional capital feels more comfortable investing in the asset class. 

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I just want to share some potential 'Assumption Modelling' for the price behaviour of Bitcoin:

Assumption 1: Bitcoin's price goes up after Christmas and New Year in anticipation of the halving event in May 2020. 

Assumption 2: Bitcoin's price goes up after the halving event in May 2020. 

Assumption 3: Bitcoin's price has priced in the halving event for May 2020 with the price rise earlier this year.

Assumption 4: Bitcoin's price begins to decline and continues to decline prior to and after the halving event in May 2020. 

Now any of these could potentially happen and it is the close monitoring of the price action which will assist any trader to get the direction of their trade correct. If they trade in the wrong direction then all they are going to experience is losses. It is irrelevant what their personal opinions and thoughts are about the future for Bitcoin. That is not what one is trading right now. Trading based on the price action and getting the direction right is crucial. 

If 'Assumption 4' plays out then I do fear for Bitcoin. We are not seeing any of these predictions that these so called experts were predicting which is a classic example of 'market noise' and trying to influence those who know very little. We were seeing price targets of $20k, $50k and $100k and these are just not realistic until Bitcoin is able to prove it's model in the mainstream and it is no where near that. Even if Bitcoin can achieve this then it is many years away. I think a realistic short term target is $10k if there is no negative or bad news in relation to Bitcoin. Of course speculative capital, the herd mentality and HODL could lead Bitcoin to anywhere from $10k to $20k and that is where traders have to monitor the price action and trends to see if they can take advantage. Otherwise shorting Bitcoin has proved to be profitable during the past few months. 

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It looks like Bitcoin was desperate to go down to the $6.4k level which it sure did very aggressively.

It has bounced back strongly and is now within a matter of hours around the $7k level.

That is some very strong support!

 

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Bitcoin has remained above $7k overnight which is a positive signal. 

Bitcoin has two key points in its favour as we move into the New Year:

  1. Bitcoin's Halving Event
  2. Facebook's Libra Launch

The SEC approving a Bitcoin ETF could happen at any moment but I think it could take a lot longer than the media portrayed. Bitcoin needs to demonstrate lower volatility so that institutional capital feels more secure in the asset and until that happens the SEC simply won't approve a Bitcoin ETF in my personal opinion. 

 

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When I see the increase of 'DEBT' sloshing around the financial system and the mere fact that Gold has not skyrocketed as a result and made new all time highs taking into account inflation and time period then I do think the stage is set for an asset like Bitcoin to really create something new and special. Whether it does or not only time will tell but the US is one of the biggest culprits and are a) printing more money and b) increasing the amount of debt in its system. Something has to give and when it does I think Bitcoin could prosper as long as it keeps on improving and adapting along with the times. 

Fact: Bitcoin is not dead and has not died yet.

Fact: Bitcoin has not gone anywhere close to zero yet. 

Assumption: Bitcoin could make another attempt at $10k and then potentially $20k in 2020. It seems to be holding up well for now. 

Whilst no one can argue with the two facts above it can be argued that my assumption is not based on any evidence and you would be right to question such an assumption.

If the reduction in supply after the halving event in May 2020 does not increase the price of Bitcoin then I think it could potentially be game over but we will see. The one thing I know for sure is that either way Bitcoin is going to see another parabolic rise upwards or a parabolic drive downwards. One should keep some capital aside to ensure they capitalise on the points on offer when the big move comes either up or down next year. 

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For those who have not seen this chart then it may be of interest (below).

image.thumb.png.193101e52022f1236de9f73ef2532faf.png

There is no rule in trading that states that past trends and patterns must play out in the future. This is the riskier  side of adopting pure 100% technical analysis. Market conditions can change. Sentiment and confidence in an asset can change. Amount of capital available to invest and trade in an asset can change. Currency valuations against other currencies can change. Economics, regulation and legislation can change. 

I don't know for sure what will happen prior to and after the May 2020 halving event but monitoring the price behaviour of Bitcoin will give us all the best clue as to any potential move. 

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$7.8k is the figure I am looking for Bitcoin to surpass on the 'daily'. It has surpassed its 20 DMA and a move above $7.8k would mean it looks to surpass its 50 DMA. 

Bitcoin_20191222_18_42.png.f25513ca96793add14b524461cf59a2e.png

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I think the $8.5k to $9.1k price zone is now crucial. Bitcoin must surpass this with conviction otherwise I cannot see how it can reach $10k again anytime soon. 

Bitcoin_20191229_17_24.png.ff89198981560c06886f60e2ab3bb101.png

Any such move is going to require positive and bullish news on Bitcoin and Cryptocurrencies. This will need to be released via the online media for all to see. 

A lot of people have an issue with the volatility in Bitcoin. I would be interested to compare the volatility levels in Gold in 2019 against the volatility levels for Bitcoin in 2019.  Then to compare Bitcoin year on year since its inception against Gold and I think 2019 would represent a decline in volatility levels for Bitcoin compared to previous years (even though still far too high for significant institutional investment). I may be wrong here in my assumption but I wonder if this research and analysis has been conducted?

A decrease in the level of volatility is what the large institutional investors are looking for and if and when they are convinced / satisfied of this will they invest significant amounts in the asset.  The point I am trying to make is that I accept that Bitcoin's price levels are extremely volatile. However if you look at Bitcoin from inception to date then I think or would not be surprised to see the price volatility levels declining. If anyone has conducted any research or has any data on this then it would be very useful to see. 

Now increase in volatility is great for traders but bad for those looking to invest, especially the large organisations. This shift is required before Bitcoin attracts higher levels of capital investment from the biggest companies around the world. 

 

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