This is a short term view of last 2 months when this market started to rise from 13$. On the chart i’ve attached the VWAP or Volume Weighted Average Price. VWAP  is equal to the sum of the volume of every transaction multiplied by the price of every transaction divided by the total volume for the trading day.

The theory is that if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP. But, because of the great strength of BTC/USD, in the last 2 months rally the price has been always above the VWAP so it’s hard to say now if it is a smart move to sell. I’ve added on the chart also 2 standard deviation lines (+1 and -1) , the standard deviation is computed using differences from close and vwap.

Btc/usd at the moment is drifting up following the +2 deviation line (not  plotted in the attached chart) and it is very bullish. A good entry point could be a drop to the +1 deviation line at ~27$.

Understanding how price interacts with the VWAP price and its standard deviations dramatically fine tune both entries and exits and gives you a professional edge.

Here’s another example with an intraday chart of today:

Chart starts at midnight of 28 February GMT time. As you can see the deviation lines provided both support and resistance giving you an edge on where to place your entry and exit point. Note how the price interacts and extends beyond the VWAP testing the 1st upper standard deviation. Next deviation line is at 33.8$ for today. For who want to give it a try, hit F6 on a sierrachart chart and select the indicator named “Volume Weighted Average Price” from the “Studies Available” list on the left. On the same window, on the right, there is the “Studies on the Graph” list where you can select the added VWAP and customize options. For intraday i recommend to set the VWAP options to:

• Input data = last price

• Time Period Type = days

• Time period length = 1

• Distance Multiplier = 1 (or 2,3,4 to see bigger deviation lines)

• Continous non resetting std.deviation line = no

• Continous non resetting mode = no

• Base on underlying data = yes

• use fixed offset instead of  std.deviation = no

This is a short term view of last 3 months,the market after a long accumulation period spent at 13$ exploded to the upside without any resistance.

I’ve talk about a target area at 24-26$ in my previous update, btc/usd reached this target area very fast but considering the strong reaction seen from the last low at 21.7$ i think that at this point is unlikely to see a drop , bulls are still in control of this market IMO. Instead  i’m more for a consolidation around 27$.

If 22$ got broken then i think it is a confirmed short term reverse and it might last some weeks but i’m confident that bitcoin will remain above 22$ for the upcoming months.

Every time the bears tried to push down the market the bulls quickly stepped in supporting and pushing the market higher, this is a typical behaviour that manifests the high level of bullishness in this market.

To conclude i’d like to add that this market has surprised me with its persistent strength. It appear the bears have simply walked off to the sidelines and waiting their turn to feed, probably ABOVE the all time top of June 2011 at 31.91$.

Personally i think that this year we will see an higher top,  at least at 45$, but it is not excluded an higher top at 75$, all depends from the level of volatility that there will be.

Again, i’ve just seen a 2 day break as the one seen last January 24, market dropped less this time about 19%, against a 25% correction of the January drop.

For the moment, i decided to raise my stop profit to 15.00$ and give the market few more days to see if it will rebounce from here, looking the net volume i see just normal corrections of a strong uptrend and i’m not worried.

This week BTC/USD currency pair should stay above 17$ and below the upper end of the price area i defined for this week, 24$-26$