March Two, 2017 by JC
Technical Analysis is the examine of the behavior of the market and market participants. Wij attempt and identify the direction of the primary trend and invest accordingly. Spil Technicians wij can apply our price-focused treatment to any market, whether it’s stocks, commodities, currencies or even Bitcoin. If it is liquid and driven by the supply and request dynamics ter that particular market, then applying our methods of price analysis makes ideal sense and it works very well.
I hopped on houtvezelplaat the Bitcoin train last year and added it to my Research Verhoging. Our clients truly love it, whether they are actively trading it or just interested te the product. To be fair, one of the thickest reasons why I determined to begin including it ter my weekly analysis is because I eyed an chance to profit from this market. At the end of the day, isn’t that why all of us are looking at thesis charts ter the very first place, Bitcoin or otherwise?
It wasgoed April of 2016 and I eyed what looked like the completion of a healthy consolidation within an ongoing primary uptrend. So I added it to my arsenal and said let’s do this. My targets up near 660-680 were kasstuk very quickly and even exceeded them. The price of Bitcoin rallied overheen 60% ter the next duo of months following that postbode. I wasgoed hooked!
Te late October last year, Bitcoin once again wasgoed completing a similar consolidation and once again there wasgoed every reason to buy. Te fact, pretty much the precies same reasons spil te April. This next target wasgoed the 2013 highs, a logical area of former supply. So the trade wasgoed: buy it overheen 700 and sell into 1075, the former highs.
Its amazing how well the supply and request dynamics work ter markets. Bitcoin is clearly no different. Te early January, spil soon spil Bitcoin ran into that 1075 area, which wasgoed former resistance ter 2013, the price fell overheen 25% ter just a week. Wij don’t mind because when our targets are klapper, wij are disciplined and take profits. Bitcoin is no different.
So? Moving forward what do wij want to see? Well, to mij it’s plain: the former highs from late 2013. Thesis were the early January highs before falling 25% and its an visible former area of overhead supply (more sellers than buyers). The market exceeding those levels is evidence that this is now the opposite and there is more request than supply near the 1075 level. Therefore, wij want to be long Bitcoin if wij are above the 1075 area that wasgoed resistance te 2013 and once again te early January this year:
Bitcoin / USD (arithmetic scale)
If Bitcoin is below the 2013 highs, then the market is suggesting that the request has NOT absorbed all of that overhead supply, and therefore a long position makes little sense. So from a risk management standpoint, I’ve made it clear to our clients since last month that wij want to be long only if wij’re above the late 2013 highs. The upside objective here is near 1630, which represents the 161.8% extension of the entire Trio year consolidation.
A good topic of conversation lately has bot the old bitcoin vs gold argument. I like it. The question is not whether philosophically one is better than the other. The only question wij need to care about is which one can make us more money. That’s why wij’re te the market and that’s the only reason why wij’re ter the market. Here’s an arithmetic chart of Bitcoin relative to Gold so you can see just what’s going on here. Wij’re getting what shows up to be a historic breakout te the price of Bitcoin vs a competitor (fair or not):
I’m a logarithmic gentleman myself but I did think the arithmetic chart also gives you some good perspective. You can see here ter the loom chart that this is a strong uptrend, no doubt. It’s not something wij want to fight and similar to the absolute Bitcoin charts above, wij want to err on Bitcoin overheen Gold spil long spil wij’re above the 2013 highs:
Here is Bitcoin priced te other currencies so you can see it’s not just a Bitcoin te US Dollars story. They are each violating out one by one. Here is Bitcoin ter Euro:
Here is Bitcoin priced te Yen:
Bitcoin ter Canadian Dollars:
This is a excellent market that behaves spil markets driven by supply and request should. Wij’ve had rallies, selloffs, crashes, rip-your-face-off rallies and everything ter inbetween. It is no different than the markets wij’re familiar to trading. The one thing I will say is that the cycles are certainly much quicker. Thesis periods of rallies, crashes and consolidation take place within a much shorter time framework than say something like US Treasury Bonds or the S&P500. So it should be treated that way. It’s a junior market. Much junior. So shorter and more frequent cycles makes sense.
I hope this sheds some light spil to how wij’ve bot able to navigate through the ups and downs te the Bitcoin market overheen the past year using the same Technical Analysis principles wij incorporate into every other liquid market around the world.
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