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Bitcoin Trend Following By TrendFollower

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Can Bitcoin rally up to $11k? Or is this just a rally to suck traders in? Either one of these could be on the table but if it is the second then it could be rise before the next leg down. 

No crystal ball  🔮 or ability to read tea leaves 🍵 so I don't know which it is going to be. 

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Bitcoin seems to be showing weakness and an inclination of further downward movement when looking at the 'daily' this morning. 

It seems to be making a series of 'Lower Highs' which is bearish but these can be seen in many long term upward trends. 

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Bitcoin is at $10.5k. Who would have thought this when people were suggesting $8k or even $7k. Now this may still happen as for me Bitcoin has a strong downward bias when looking at the 'daily' but it is a question of if and when. I cannot 100% state that it will. Bitcoin could all of a sudden shoot up to $13k such is the nature of the asset we are dealing with. 

It then comes down to which directional trend you are trading. If you are long based on the move from $3.5k onwards then you must either let this correction pass by and use the opportunity to add to your position or sell and re-enter back in when the upward move re-commences. That is if it recommences. 

Trading Bitcoin is tricky and fraught with risk. Due to the volatility it is not an easy asset to trade. Setting effective stop losses is even more trickier. The last thing you want is to be stopped out due to the extreme volatility.

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So $10.8k hit for Bitcoin. It seems to be attempting that $11k figure where on the way it is going to find some resistance.

I think it is impressive that Bitcoin is trading above $10k. This means for now it has some strong support at that level. Of course it could drop down below that but a lot of 'Pro Bitcoin' are thinking that in the next 3-4 months and certainly before the halving event Bitcoin is going to surpass $20k and are positioning themselves $10k or around these levels for that next monster move upwards. 

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With Bitcoin hitting $11.6k overnight the question is whether this is a false rally or indeed the start of the rally which will take Bitcoin towards $20k and over?

If Bitcoin crosses $12k then it will be interesting on whether it can overcome any resistance and stay above $13k.

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Though the longer term trend in Bitcoin is still downwards the current and short to medium term trend for Bitcoin is upwards.

The question is do you want to trade with the current trend or against it? I think shorting Bitcoin at this juncture is extremely risky as just when so called experts and Bitcoin bears are calling for $7k and $8k Bitcoin does the opposite and goes to $12k. 

I stated in one of my Bitcoin threads either this one or the price behaviour one that in my opinion Bitcoin was more likely to go back up to $12k then go down to $8k and $7k. It cannot go down too far so that confidence is lost in the asset.

A lot of traders were trying to apply waves and EWT and Fibonacci to Bitcoin but Bitcoin will not be bullied into following historical patterns and theory as it is in the process of making its own new history. This is within a new asset class as we witness a digital revolution.

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Bitcoin is still trading above its 20, 50, 100 and 200 DMA's as the chart below illustrates.

Bitcoin_20190810_13_48.thumb.png.2b1e5fa01211a8283550a6957ad7776d.png

Also the level of volume has increased since the start of 2019 to the more recent months as shown below.

Bitcoin_20190810_13_49.thumb.png.e5c5939c01f9ae901f0612937a425b4a.png

The price is also trading above its Parabolic SAR. Now this is an indicator based on historical data hence traders must be careful as it could change quickly for Bitcoin and catch traders out.

Bitcoin_20190810_13_50.thumb.png.8ebe519dd6ab31e89dc05b0679edaf67.png

Bitcoin is either going to go towards $13k or it is going to go below $10k. Whilst it is in between deciding it is taking time to consolidate which is not a bad thing. Every asset needs a breather!

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If you think Bitcoin is going to trend all the way up to $20k then just sit back and enjoy the ride if you are already long from months back. If you have the capital and your risk management is sound then you may want to add to your position on any dips but if not then just relax. Do not worry about daily or even weekly price fluctuations.

Trend followers of Bitcoin must look at the longer term picture. We have witnessed just in 2019 alone a parabolic price move which has trended from $3.5k to $12k. This is after the so called 'Tulip Mania' style Bitcoin bubble which presented a fantastic shorting opportunity from $20k down to $3.5k. That trend lasted around 12 months.

If you look back at the price of Bitcoin since 2009 then it has been increasing every year and I have no doubt it will post another high this year or certainly prior to the halving event if Litecoin is anything to go by. Bitcoin is the master of the Crypto Universe and I have not seen anything to suggest any other Cryptocurrency is going to de-throne it anytime soon. 

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The price on the 'daily' has gone below its 20 and 50 DMA's. This is bearish. Bitcoin must go above this price point quickly otherwise more short positions could open and force / drive Bitcoin downwards, especially the trend followers who are already short and adding to their positions. 

Bitcoin_20190816_19_09.png.a462945f69c6c38371586b10cff11ad8.png

 

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Bitcoin is still trading above its 100 and 200 DMA's. It is below its 20 and 50 DMA's. The 'bulls' and 'bears' are having a battle right now and one of them will emerge the winner.

Bitcoin_20190825_19_05.png.5ff708ca63f7354656e88f070f521126.png

I think September 2019 will tell us more in which direction Bitcoin is going to trend in for the rest of 2019. 

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@Ben1,

Thanks for the post. 

Are you able to articulate any point you are trying to make for the wider IG Community?

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It seems for now a price level around the $9.4k seem to be providing some support. If it was not for the halving event I would have made an assumption that the price is more likely to fall than rise based on the current 'daily' but with the having event I think the chances of prices rising increase from here. Of course the price action will tell us the answer to this very shortly.

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For the moment no further details as I don't want to influence the interpretation of the data. I would very much appreciate other peoples interpretation which then becomes unbiased and less chance of us missing something.

What i will say TrendFollower is you have made an excellent observation just based on the data chart regarding some support at $9.4k. 

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@Ben1,

Thank you. It really was not that difficult. 😀

I am going to include the chart 'daily' to illustrate the observation to the wider IG Community. 

Bitcoin_20190831_12_20.png.23dc4ac3f3ead43e7df71c25635b289d.png

There is clearly support around this price level for now. 

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@Ben1,

If this current support price level breaks then I think we are going to have the potential to see around the $7.5k price level which could present a shorting opportunity. Otherwise we are going to see a break upwards which could either be a monster move or just a move above $11k to $12k. Either way there will be a trading opportunity but I agree with you that we need to see which direction Bitcoin is likely to continue travelling in before any traders decide to make their move. 

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Keep an eye on the upside (top blue area) around 10k.

Bitcoin_2.jpg

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I am intrigued what September 2019 to December 2019 will bring in terms of trending action for Bitcoin.

I think we are about to find out very soon which way Bitcoin is going to trend. Don't worry if it is down. If that is the case then simply go 'short'. 

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Trying to break critical level, be ready for anything!!

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Bitcoin is still trading above its 20, 50, 100 and 200 DMA's. This is against the notion of the wise that Bitcoin was going down to $8k, $7k and lower. It may still do (I don't know) but why has Bitcoin not gone down to these price levels? Could it be something called 'Support' at certain price levels!

The chart 'daily' below illustrates my point above. 

Bitcoin_20190908_10_16.png.3d313b894e32c76b60032a84a234ef21.png

Now if you look at the MA curves then none of them are sloping sharply downwards. This is encouraging. It means a large or sharp downward move is less likely though still possible. None of them are sloping sharply upwards either because we have been in a correction / consolidation phase so I would not really expect to see that. That will come should the Bitcoin price motor and trend upwards strongly. The MA curves are sloping sideways and they will change / adapt depending on the next Bitcoin trending action. 

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If Bitcoin breaks below its current price then some may wish to consider a 'short' trade. 

Bitcoin_20190924_18_52.png.c544548f573f15ce91bd6723de145901.png

Bitcoin is trading below it 20, 50 and 100 DMA so for those who are already short as soon at this was crossed will be the more aggressive traders with a higher risk tolerance. 

Bitcoin_20190924_18_54.png.94b90b7278c927c45b419dd9719f412f.png

If Bitcoin were to head towards its 200 DMA on the 'daily' then there could be a lot of points on offer on the short side. Even if it does not breach it but goes towards it still represents a good trading option. Remember the risk with Bitcoin is that it can reverse quickly and sharply and take stop losses out in a blink. 

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Wow a clear breakout for Bitcoin to the downside. The battle around $10k has been won by the bears on this occasion. There have been many battles in the past and there will be many battles to come in the future but on this specific occasion the winners have emerged on the short side. 

 

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Bitcoin is trending downwards. From a trading perspective the only trade on is 'short' in my opinion. I see Bitcoin trending downwards until there is a positive driver for it to go upwards.

I was reading Tom Lee's thoughts on how the S&P 500 would have to make fresh highs for Bitcoin's price to drive upwards. He was stating this based on Bitcoin being a 'Risk On' play. He may be on to something here and time will tell whether there is a serious correlation between S&P 500 and Bitcoin. 

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At the risk of sounding an ****, I called it months ago on these very boards. 

Edited by TheGuru12

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@TheGuru12,

You did so you should have traded Bitcoin on the 'short' side and made some profits if you had such a strong conviction. 

At that time I would have found it difficult to 'short' based on the trend and price action. Recently the price action for Bitcoin supports a 'short' trade. 

It all depends on your trading strategy. Mine includes price action and trends. You may have a different trading philosophy. 

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One of my 'mantra' is to identify the strongest trending assets as early as possible. Bitcoin could be about to trend strongly though this needs to be confirmed which is not the case yet.

Bitcoin is one to keep your eye on though as if it does begin to trend strongly upwards then it is about participating to take as many points as possible from the trade. 

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Even though I personally think Bitcoin is going to increase in value prior to the halving event this is a mere assumption that will need to be tested and confirmed by the price action. A validation of sorts. 

From a trend perspective, one could argue that:

  • On a 'monthly', 'weekly' and 'daily' basis it is not in an uptrend but a downtrend looking at potentially breaking out into an uptrend but no confirmation as yet. It could easily continue on its longer term downtrend. 

So for higher risk takers they may anticipate a strong trend action at this juncture going forwards and could go 'long'. Obviously at this stage there is a stronger chance that the trend does not materialise but if right then there would be a great points potential. So it is about risk/reward. Both are great at this time. 

Or one could wait until key moving averages are crossed and more lower risk trend traders may wish to wait for the moving averages curves to begin sloping upwards. 

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