Month: September 2011

Long Term Update: MtGox Weekly Chart

On By CryptoAdvisorIn Long Term Trading3 Comments

After failing to break through my weekly moving average the BTC/USD moved back to a short term downtrend with a lower top at 6.8$ after the previous one of 7.3$; i initially though that a bounce to 8.5$ was possible  but i was wrong, the market failed to going above 7.3$

At this point i’m not so sure about the main 4.2$ bottom, continuous failures to go above my reference weekly moving average is a confirmation of the overall bearish outlook at least on a weekly basis. I can speculate to project a new bottom and i’ve a new support at 4.1$ using an halved volatility factor, with a standard value i have a level around ~3.5$ where i think strong buyers will come back for a new buying opportunity.

Long Term Update: MtGox daily chart

On By CryptoAdvisorIn Long Term Trading3 Comments

I think that the narrowing of the daily range of the last 5-6 days  it is a sign of exhaustion, especially since it has happened after the day the market just put in a selling  bar with high volume (~200000 bitcoins) on 9 september

As long as the  4$ bottom will hold i think that a bounce to 8.5$ or so will materialize in the upcoming weeks. At 7.5$ there is  my weekly moving average that so far worked very well, a penetration of that moving average will be a good sign of improvement for the long term trend. Thus i recommend to open a long term trade only after a clear breakout of 7.5$ using 4-4.5$ as stop loss.

 

Short Term Update: MtGox 4h chart

On By CryptoAdvisorIn Short Term Trading2 Comments

With this update i’d like to introduce a powerful concept, the “Ross Hook”. invented by Joe Ross, a trader and investor of over 50 years. 
Ok  but what is the ross hook? Well, the Ross Hook is a technical formation that occurs in trending markets where there is a failure of the market to make a new high in an uptrend or a new low in a downtrend. The Ross Hook must occur after a 1-2-3 trend reversal formation has taken place. As you can see on this 4h chart of btc/usd at MtGox in the last 5 days a 1-2-3 pattern formed with a first breakout labeled “RH” or Ross Hook.
Here the btc/usd failed to make a new low at the point “3” on the chart, then it has done a first strong breakout of point “2”, the first istance that failed to make a new high created the Ross Hook (labeled “RH” on the chart). If the market will go above the Ross Hook a trader might try to open a trade, in this case above ~7.3$; a breakout of 7.3$ would imply a temporary reverse in the short term.

For who is interested in this approach i recommend the book “Trading the Ross Hook”

Long Term Update: Weekly outlook at MtGox

On By CryptoAdvisorIn Long Term Trading

I am very sad for all long term investors to report “No change” since my last weekly long term update, my weekly moving average has remained unchanged in its down movement and I am as pessimistic as ever that it will reverse soon.

Under the pressure of that moving average we are constantly falling and any attempt to rebounce failed to break above the average. I think that it will be difficult to avoid a breakdown of the 5.74$ august bottom, it will probably happen within the end of september or early october.

How long will the price fall last?
Well, i can’t say with certainty but i can compute an estimate of this weekly downswing assuming that it will last up to 25 weeks and average volatility, in this case i’ve as a target something around 3-4$, assuming instead a strong value of volatility i’ve ~2$ as possible target.

Long Term Update: MtGox daily chart

On By CryptoAdvisorIn Short Term Trading2 Comments

Often the BTC/USD follow a 24 days cycle (12 days up movement  followed by 12 days down movement), during the strong rise of april-june instead it followed a 12 days full cycle (6 up, 6 down). I dunno why, perhaps it’s tied to the ~12 days period of bitcoin difficulty adjustment. So far is working very well and as you can see in the left chart now a reverse of the cycle is due.

The fact that cycles exist does not imply that they exist all the time. Cycles come and goand external events sometimes dominate and obscure existing cycles. Experience shows that cycles useful for trading are present only about 15 to 30 percent of the time. This corresponds remarkably with J.M. Hurst’s statement that “23% of all price motion is oscillatory in nature and semi-predictable.” It is analogous to the problem of the trend follower who finds that the markets “trend” only a small percentage of the time.

I strongly recommend J.M Hurst book “The Profit Magic of transaction Timing”