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Bitcoin Trend Following By TrendFollower

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I am sure many of you will have heard of, come across or even use the 'Parabolic SAR'

Bitcoin_20191012_16_57.png.2f187314aababd8829bc8b599bb730b0.png

Ideally you want to see the price above the green dots and the green dots above the red dots. 

Now there is a new technical indicator for Bitcoin called the 'Peterbolilc SAR'. This has been coined after the famous Peter Brandt. 

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New Bitcoin Trading Indicator Named After Iconic Trader Signals Buy

https://www.businesstelegraph.co.uk/new-bitcoin-trading-indicator-named-after-iconic-trader-signals-buy-newsbtc/

I will be interested to see how this plays out. I shall be watching. There are no guarantees of course but again excellent learning for anyone interested to see if a strong reversal comes in Bitcoin as predicted. 

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For me, Bitcoin, is a high risk asset to trade. There is no doubt about it. It is not for the feint hearted. You do not have to believe that Bitcoin is good or that it is going to succeed. You are merely looking at profiting from the price movement. If you can be on the right directional side of the trade then this will increase your chances of profiting from the price movement in Bitcoin. In another words, trade Bitcoin using some form of trend following. 

I want to trade in the direction of the Cryptocurrency market in general. This can be either 'long' or 'short'. This simply gives you an advantage as far as I am concerned. Don't worry about whether the Bitcoin price is absurd or the value of Bitcoin or another of Cryptocurrency for that matter. It may well be over hyped and full of speculative capital but one does not need to get bogged down in those arguments. 

Now for Bitcoin I tend to use the 'daily' timeframe. This is well documented in most of my threads and posts. That is the timeframe I prefer based on my own trading style but you must make your own decisions based on your own trading styles. 

The other thing I do is monitor the price action of Bitcoin on a daily basis. I try and live and breathe the asset. That is important so that you are in tune with the asset and the type of news that makes it go up and the type of news that makes it go down. The risk is that Bitcoin can move without any news in either direction which is why it is such a risky asset to trade. Now I use moving averages but these are time lagging indicators so one must understand this. 

One can complicate trading Bitcoin but I try and keep it simple. By looking at trend lines one can clearly identify the path Bitcoin has the potential of taking. One can then look at breakouts which are strong around these trend lines. There is no guarantee that using such a strategy will result in 100% correct trades but that is not possible regardless of the trading strategy one adopts. I am merely presenting a simple trend following style that one could consider and do more work on themselves to give them a chance of succeeding in trading Bitcoin. 

Of course there are many ways to skin a cat but this thread is in relation to trading Bitcoin using Trend Following techniques. It is one of many ways in which to trade Bitcoin and you need to make up your own mind which is better for you. This in my opinion will be one of the less complex and more simpler ways to trade Bitcoin.  

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The absolute long term trend since the inception of Bitcoin to date is upwards. Therefore if you were someone who bought and hold over this period even with the large moves downwards you are most likely to have been in profit. 

This is one asset class where HODL can work effectively. The big boys and institutional investors want to drive the market down, pick up Bitcoin et al, as cheap as they can and this means that the small inexperienced traders end up having their stop losses triggered and taking losses. For those traders that do not use stop losses they end up making even bigger losses.

Bitcoin et al then move up sharply and rally. I have seen it time and time again which is why I do not panic when Bitcoin is going down. I have seen it far too many times and everyone starts scaremongering of how Bitcoin is a fraud, it is worthless, it is going to zero, it is going to crash, etc. 

Traders could take a longer term trend following approach to Bitcoin rather than trying to trade the daily price fluctuations or even the weekly ones. 

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Boom!

Potential Breakout Alert.

Watch the price action and establish if this is one of the strongest trending assets. 

If it meets your signals and indicators then trade it!

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I am looking for Bitcoin to hit and then surpass $9.6k. This I think will trigger some serious buying as the price crosses the 100 DMA on the 'daily'.

Bitcoin is already above its 20, 50 and 200 DMA's. 

The next thing I will want to see is if the curves begin to slope upwards for the moving averages. This will be a very bullish signal and indicator. 

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Well 8 hours later from my previous post today and Bitcoin has hit and surpassed the $9.6k level. For me now $10k is on the cards and I would be very surprised if Bitcoin does not close above it in the coming days. 

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The 20 DMA is showing signs of beginning to slope upwards from the tip on the 'daily' timeframe. This should have a domino effect should the strong price action continue in its current direction.

 

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Some of you may be interested in looking at the 'Momentum' indicator. It is showing above 0 and in the green so is a bullish signal.

By itself it does not guarantee a successful 'long' trade. When used with other indicators, if they all align as per your trading strategy, then it could assist you in making an effective trading decision.

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The MACD indicator is a good way of seeing any potential trend changes. Usually when it goes above zero and 'green' is 'seen' then it can be a positive and bullish indicator. I accept that it is based on moving averages which I have stated several times are time lagging indicators but nevertheless it is worth keeping an eye on.

Bitcoin_20191029_19_28.png.844a66fd0dadd0242a1c5e019d6c808b.png

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If you look at the steepness of the downward move then this is beginning to decline when you look at the 'daily'. What I mean by this is that the 'lower highs' being formed in this downward move is getting less steeper downwards as can be seen by the latest 'lower high' which was formed.

This is another indicator of a potential trend change. Of course Bitcoin could continue downwards making new 'lower lows' but monitoring the price action and looking at certain different indicators together will help to identify if this is a potential trend change or continuation of the downward move. 

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If one looks at the 'momentum' indicator for Bitcoin on the 'daily' then it is positive in favour of Bitcoin. 

Bitcoin_20191104_21_16.png.a87c8e7b74271daa61d1051cac7a6159.png

It will be interesting to see where Bitcoin is early tomorrow morning after Asia takes over whilst the West is asleep!

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If the rumoured gap fill for Bitcoin on the CME Futures is correct then it may lay the foundation for a bullish move in Bitcoin in the coming days and weeks.

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When you look at the 'Commodity Channel Index' (CCI) then it seems based on the average price level of Bitcoin the price is low. This is based on 2019 time period using the 'daily'. 

Bitcoin_20191112_07_14.thumb.png.10f6da9bf004e695c539b0ba54026072.png

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There is little doubt when looking at the 'daily' that Bitcoin is trending downwards. It has a bearish price action and I think if there is going to be any big move to the upside then it is around a month away. Call that a 'gut' feeling and based on 'instinct'.

If I am wrong then I am wrong. The price action and any trend manifestation will either prove my 'gut' and 'instincts' correct or it will not. I am not worried about sharing my inner thoughts and I am not worried about being wrong.

Traders will be wrong on many occasions so one should not worry about being wrong. Ideally you want to be right more times than you are wrong but as I have mentioned in my 'Trend Following' thread that even if you are wrong on more occasions you can still be more profitable should your profits be greater on your winning trades than your losses on your losing trades. 

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Bitcoin is trading below its 20, 50, 100 and 200 DMA's on the 'daily'. This is a bearish signal and I fear that the potential is growing stronger for Bitcoin to visit the $6.3k to $6.5k price area before any strong and sustained bullish move upwards.

Bitcoin_20191118_20_55.thumb.png.73d2a9372b97270c3a1deef872c32444.png

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The current downward trend on the 'daily' seems like it is heading towards the $6k to $7k zone. Only a sharp trend reversal backed up by some very positive news can change that potential scenario. 

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The only trade on is 'short' with Bitcoin at the moment as it is clearly in a current downtrend but also a longer term downtrend since the parabolic move towards $20k. 

If the 'halving event' does not rejuvenate the trend in Bitcoin then I really do fear that it could go a lot lower and any move below $5k would be very damaging to both the confidence and credibility of Bitcoin. 

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The 'Stochastic Oscillator' is showing Bitcoin on the 'daily' approaching oversold levels. If this ties in with my price target of between $6.3k to $6.6k then Bitcoin could witness some strong buying at that level which coincides with Bitcoin indicating oversold levels. 

Bitcoin_20191124_09_17.thumb.png.bd7457440cdb20ade65d9bc59d44e8a0.png

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Bitcoin trending down. We have not seen any consolidation on this recent move which is a worrying sign. I would like to see Bitcoin consolidate once it has bottomed but we really have not seen it unless the bottom was really around the $3k to $4k area. 

I guess we are about to find out if $3k holds. If not then this could be a rather profitable short trade. 

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Bitcoin could potentially see a period of short covering which causes it to bounce upwards sharply from the $6.5k. It actually hit $7.3k. You may also get value investors dabbling or traders thinking they are getting a cheaper entry point. This could cause the price to rise. 

The next few weeks prior to Christmas should give us a better idea if at the start of 2020 Bitcoin is going to target its all time high or try and re visit its $3k bottom. 

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For 'Swing Traders' the move down to $6.5k and then swing towards $7.3k would have been a great swing trading opportunity. 

Of course there are signs that this swing could be the result of a 'relief rally'

There seems to be a battle going on between those who are 'bullish' and others who are 'bearish'. I think the build up towards Christmas and New Year is going to be very interesting for Bitcoin. 

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Bitcoin's 'Monthly' chart is showing it is in a longer term downtrend.

Bitcoin_20191201_10_00.thumb.png.52dc0667c17a4a17bd0dfb1629e0a381.png

Bitcoin's 'Weekly' chart is also suggesting it is in a downtrend.

Bitcoin_20191201_10_01.thumb.png.99b49bd95447930e3d3215efc9aabc3b.png

Bitcoin's 'Daily' chart is showing it is still involved in a downtrend.

Bitcoin_20191201_10_02.thumb.png.abc6f7d1a8e696ec3ebf58787bd9cc32.png

Bitcoin's '4hr Chart' is also showing downtrend price action.

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When you start looking at the lower timeframes the arguments present themselves for a change in short term trend to a bullish one but this could just be part of a larger downtrend. 

For me if Bitcoin cannot simply stay above $10k then it does not look good for Bitcoin longer term.

However one must remember when an asset gets ultra bearish and gloomy and bottoms out then it could be the time to start looking from a 'contrarian perspective' if there are any strong fundamentals which support any view. 

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Will agree with TrendFollower on the downtrend data. I’m looking at 3 key levels for a downtrend scenario.

Bitcoin xmas 2019.jpg

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With Bitcoin after it has been declining strongly we tend to see some profit taking and short covering which causes a few days of large gains and a bit of flurry before any downtrend continues. 

We could well be witnesses the start of that now. 

This is where the 'Expert Scalpers' come in and scrape all the profits! I must admit there are some serious points and gains to be made if you can successfully scalp here on not just Bitcoin but some of the other alt coins that IG's offers on it's platform. However, it is very high risk and Cryptos can move the opposite direction very quickly but the points are there as the movement of points is electric on these types of days. 

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Bitcoin is still clearly in a downtrend but for some reason I am sensing a possible rally towards $8.5k. After this it could still continue its downward move or not. I don't know but I just have a feeling on an upward move towards this price level. The difficulty is that I can also see a downward move towards $6k such is Bitcoin's unpredictability right now but based on the current trend I would have to favour the chances of a downward move more likely but cannot rule anything out right now.

This is what makes Bitcoin so difficult to trade. With Commodities you can look at the weather, the harvest, the supply and demand fundamentals, the currencies, etc. With Crypto, I admit there is a lot of hype, fake news, hysteria, speculative capital, etc. 

Current Trend: Downwards

 

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There is the potential for Bitcoin to trend upwards on a short term basis over the Christmas and New Year period whilst other markets are more quiet as investors and traders take a break over this festive period. 

I will be interested to see how the Asian markets react and how Bitcoin performs over the next 24 to 48 hours. 

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Posted (edited)

I mentioned in my earlier posts that Bitcoin's current trend on the 'daily' is downwards. The chart below with the arrows showing 'Lower Highs' highlights and supports my point.

Bitcoin_20200107_06_50.png.aeb8926fb48a2b04afdb0d37e7e225a2.png

It could be that the current move also makes a new 'Lower High'.

However one thing to remember from a 'Trend Following' perspective is that Bitcoin has seen a more solid consolidation and range bound activity over the past month or two prior to this positive / upward price action. The other thing to remember is that Bitcoin can move very quickly and sharply and be in the motion of changing the trend before signals and indicators can highlight this (time lagging factors). 

Edited by TrendFollower

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Looking at the weekly chart I'd say bitcoin has established a very compelling basing pattern and is on the cusp of breaking up out of a range; not complete yet but the MACD (bottom chart) suggests this is inevitable. This looks like a highly bullish set-up based on technicals. Fundamentally this is plausible based on a number of reasons: the collapse of real yields [as measured against the US 10 year, also a driver of the gold price] is a signal that the market is anticipating that inflation is reappearing which will be driving interest in alternatives. On the supply side it would seem probable that the crypto world will continue to consolidate, while the mechanics of trading, saving and spending these currencies continue to improve. I'm as baffled as anyone by crypto world, but this is a set-up that's hard to ignore. I'd be very wary of holding a short position over the next few months.

 

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Yes Bitcoin is bullish but until it crossed into the 'green rectangle' prize zone then technically any trend reversal on the 'daily' will not be established nor confirmed.

Bitcoin_20200107_21_06.thumb.png.340a5d92ee6a96a6704052a1bf7a9425.png

So the aggressive and speculative traders will already be 'long' anticipating the move towards this price zone and even if Bitcoin fails then they will still have profited. The aggressive trend followers will also have opened 'longs' as Bitcoin on the 'daily' has crossed its 20, 50 and 100 DMA's. If it manages to cross its 200 DMA on the 'daily' then the 'green rectangle' price zone will come into play. Breakout traders will also have gone in 'long' so we are seeing an amplified move upwards. This will be closing 'shorts' as their stops get triggered. They in turn may well open 'long' positions thus amplifying the move upwards as short positions are unwound. 

Bitcoin_20200107_21_09.thumb.png.f589bd4ef81e74afd3625cb120bfcd3d.png

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