Bitcoin Price Descending Triangle. Will Price Move Up or Down?

BITSTAMP:BTCUSD   Bitcoin / Dollar
Bitcoin price has formed a descending triangle pattern. As of today price has touched the descending portion of the triangle 3 times and the horizontal portion twice.

Based on the length of the triangle, it could take until about the end of the month for price to exit the upper or lower boundary. Price should continue in the same direction it exits from the triangle (if it exits out the top, price will move up and if it exits out the bottom price will move down).

Currently watching 4 indicators which are all positive right now:

1) Premier Stochastic Oscillator
2) Elder Impulse System
3) BBImplulse Indicator

I have set most of these indicators for a shorter time window in order to pick up a change of price direction more quickly. You could make this your own and tweak the time windows to see how they affect each indicator.

Volume (not shown here) is still relatively light. If it continues to be light, my expectation would be for price to resolve to the downside. There appears to be quite a bit of price support in the $550-$560 range so I wouldn't necessarily expect the price to drop below that range right away.

Current strategy: If there is another green candle tomorrow with the price above today's high price, and the indicators remain positive, I will likely buy. Would likely set stop at or below low of previous green candle.

Price has had quite a bit of difficulty breaking above the $660-$680 range, so a break through the upside of the triangle won't be too significant until $680 is broken. At that point I believe price could accelerate higher.
That's exactly how you can get fooled by a technical analysis done in a short time-frame. The higher time-frames are always more important for the overall trend direction. If you switch to the 1-week chart you will find out that ALL indicators you used already show a downtrend. Lot's of divergence between the price going up while the volume, BBImplulse, Premier Stochastic Oscillator and the other indicators are going down already:

+1 Reply
TerryKinder ChartArt
That's an excellent point. I have been trying to flip back and forth between the daily, weekly and monthly charts. In this case, I am looking to see if I can take advantage of the shorter rather than longer term trends. I haven't published any here, but more than anything I tend to look at Point and Figure charts which look at the price direction without regards for the time frame at all.

I also would not plan on going long if the price doesn't exit out the top of the descending triangle. I suspect that the price could take until the end of this month to resolve. It seems to be trading in a range right now and I expect we'll get a little more clarity on which direction price will go once it exits the triangle.

This chart is really intended more to be used like a swing trade where a purchase would be made and held for a few days out to 10-14 days - most likely 7-10 days. I haven't tried to trade Bitcoin this way. As I said, I have been using Point and Figure charts and waiting for the price to hit a trigger. Right now on my P&F chart $680 is the entry price.

If I had to guess, I suspect price won't exit the descending triangle tomorrow, so in that case I wouldn't buy.

I think it is a very good point about the weekly divergence on the indicators. I still think a shorter time frame trading strategy could work for Bitcoin, but it is always a good idea to look at that strategy within other time frames and any vaid chart patterns as well.
ChartArt TerryKinder
"I suspect that the price could take until the end of this month to resolve. It seems to be trading in a range right now and I expect we'll get a little more clarity on which direction price will go once it exits the triangle."

I fully agree to that. There is a range between somewhere around $605 to $635 that we have to break out of to establish a new trend direction. Since we failed to go above 635 US Dollar again today despite the good news that Dell accepts Bitcoin it's now even more clear to me, that we will first visit something below $605, before the price will start a new trend cycle in a few weeks to finally break 700 US Dollar. As you said $680 might be the entry price. I would say $660-$670 is the entry price - above the last peak.

I will try the Point and Figure charts, I haven't used them so far. So many options :)
TerryKinder ChartArt
Yes, I tend to think Bitcoin price will move lower before it moves higher. Have been trying to find a way to trade a shorter term move, but haven't found a trade I liked yet. May end up waiting until Bitcoin price hits $680. On the Point and Figure charts you wait for the next higher price to be hit, after the reversal. In this case, on my chart the high price hit $660. My chart is set for $20 increments, so a price of $679.99 isn't enough to get me to buy - it has to reach $680 or above. P&F charts are pretty interesting. You can do a lot with them:

1) Find valid price targets. It is possible to have valid price target, both higher and lower than current price. For example, on my current chart the next valid higher price target is $900 and the valid lower targets are $360, $260, and $140.

2) You can calculate risk/reward ratios for trades. I won't go into all the details, but based on the $900 price target I am willing to buy when price hits $680 and could set my stop loss at $610, $600, $590, or $580. A stop loss of $560 risks too much for too little reward.

The ratios work out as follows:

$610 - risk/reward ratio is 3.14 - for every dollar risked potential reward it $3.14
$600 - 2.75
$590 - 2.44
$580 - 2.2

$560 is not acceptable because the risk/reward ratio is 1.83. The ideal risk/reward ratio is 3, but you can't always find the ideal trade. 2 or above is acceptable. A lot of it depends on risk tolerance.
+1 Reply
ItisCalvin ChartArt
While the longer term are more accurate it is interesting to see how the indicators such as StochRSI sort of "merge" together. Like viewing it on the longer periods then switch to the shorter you can see that it has been at a certain place. It is hard to explain wihout a looking at the chart.

Okay, I think I may have it. StochRSI has a certain direction it goes depending on how much time it stays OVERSOLD or OVERBOUGHT. On the 4 H for Stamp you can see it OB. Move to the 1 D and you see it spike only slightly on that day. I may PS CC an image, but got to do other stuff.
ChartArt ItisCalvin
And I was just analyzing the Bollinger Bands in multiple time-frames. We are in the larger time-frames in a very tiny downtrend while we are still in a stable horizontal position in the shorter time-frames.

For me this means, if we now don't go up the very slow downtrend increases until we roll over into the correction I see in so many indicators approaching.
ItisCalvin ChartArt
Bitcoin is a unique beast. I haven't seen anything else move faster than it in my time investing. When looking at typical NASDAQ or NYSE short time frames are the worst for getting the trend. You need 1D+ minimal for getting accurate trends since they move so slow. BB is fun to look at in Yahoo or MMM.

I'm going to be cautious for now. Still in and have some on Finex for swaps.
+1 Reply
ChartArt ItisCalvin
Bitcoin moves as fast like stocks the first minutes after the opening bell (after news the previous evening after the closing bell) - every time there is some popular news on Reddit about Bitcoin.

There are just so few traders with lots of BTC that they can easily move the market. It's not as worse as altcoins, but similar in a smaller scale.
+1 Reply
ChartArt ChartArt
Update 1
2 days later. Increasing bearish signals in the weekly chart. Only the BBImpulse is getting less negative.

TerryKinder ChartArt
Probably tomorrow I will publish another Bitcoin chart. Have modified the descending triangle a bit and also went back to the longer time frames on the indicators. I'm still thinking that the Bitcoin price will drop out of the bottom of the descending triangle rather than exiting the top. RSI-Stochastics on the 1-day chart is rolling over and the 1-week looks to be flattening some. Just have not been convinced by the combination of price action and technical indicators that the Bitcoin price is going much higher in the short-term.
l ve been foolwing most traders here however seem s you fuckers been wrong all the time,don even publish here
-3 Reply
TerryKinder N.Bayrak
If you're going to curse at me, at least take the time to run your post through spell check. Once you have spell check down, you could create some charts yourself and see how accurate they are. Good luck.
+1 Reply
MoonTrader N.Bayrak
No need to be hostile. I'm open to a lot of interpretation, but I do tend to think the price will maintain the upward channel for now. If not, I have my stops ready. Just find a good risk/reward ratio that works for you and you should be able to make your own decisions.
+1 Reply
TerryKinder MoonTrader
I agree. The only point I might differ a little on is whether we consider if the price is in an upward channel. It can be drawn a lot of ways. A chart I modified from another user (https://www.tradingview.com/v/4pBWY6TB/) the other day showed an upward channel beginning the end of June or beginning of July.

On that chart I drew several resistance lines from the high. You could make a good case for the resistance being broken or for continued resistance.

To me, we're on the bubble price-wise - it could go either way. I'll feel more sure the price direction is reversing when price breaks through $680.
MoonTrader TerryKinder
The one thing that makes me think we are destined for the upside is the similarity in price action to the pre-Gox bubble plateau in Feb-March 2013. Furthermore, there are a lot more big players now than there were before, and that makes me think the heavily interested parties (whales) will do whatever they can to maintain an uptrend. Whoever bought those 30k BTC from the SR auction must have been pretty damn sure he would make a return on his investment because he bought them for over $1k each.
+1 Reply
ChartArt MoonTrader
It currently looks similar to May 27 - May 28, 2013.

And it was a well known VC who is not a trader who bought the 30k BTC from SR. He isn't going to sell them:

“He’s keeping all of the coins—he won the auction independently,” Avish Bhama, Vaurum’s CEO, tells WIRED. “He’s a client of ours so we’re storing and securing them for him. The partnership enables us to offer liquidity to emerging markets by leveraging unique market making strategies across our exchanges.”

“Collectively, we’ve been brainstorming to come up with new ways to help grow global bitcoin adoption,” Vaurum Chief Executive Officer Avish Bhama said in the statement. “What we came up with is a way to leverage our exchanges and utilize the auctioned pool of bitcoins, as well as market making strategies, to help provide liquidity in these underserved markets.”

"While one company, Palo Alto, Calif.-based Vaurum, a bitcoin exchange for high value traders, backed by Boost VC, the company founded by Tim’s son, Adam Draper, yesterday announced it had partnered with Tim to provide bitcoin liquidity to emerging markets, we learned in the press conference that was just the beginning of his plans. Already, Boost VC has invested in bitcoin payment gateway, Bitpagos, with roots in Argentina, a nation with an average inflation rate of 205 percent between 1944 and 2013, making it a perfect place for bitcoin users, which are forecast to experience 11.1 percent inflation this year. Boost VC is also already positioned in Mexico, a country with an average inflation rate of 27 percent between 1974 and 2014, through its investment in Coincove, a bitcoin financial services company with plans to expand throughout the rest of Latin America. Tim is also an investor in bitcoin company Korbit, based in Seoul, South Korea, though that nation has a traditionally stable currency. The Drapers, along with Vaurum CEO, Avish Bhama, said they would focus their global efforts on four countries: India, Brazil, Argentina, and Turkey, which have all historically suffered from hyper inflated economies."

WIRED http://www.wired.com/2014/07/vaurum/
BLOOMBERG http://www.bloomberg.com/news/2014-07-02/vc-tim-draper-wins-entire-cache-in-bitcoin-auction.html
BIZJOURNAL http://upstart.bizjournals.com/entrepreneurs/hot-shots/2014/07/03/the-first-hint-of-tim-draper-s-plan-for-global.html?page=all

+1 Reply
ChartArt TerryKinder
After it looked only like a short peak it now looks like the masses don't care about chart analysis and simply buy.

I now had to panic buy in at $632, because the uptrend is getting stronger and stronger. I will sell as early as possible once I see a reason, but for now the uptrend is very healthy underneath in the very short-term charts.
+1 Reply
TerryKinder ChartArt
I am still holding off buying for the moment. Would really like to see a full candle above the descending triangle, or maybe the price move and stay above $635-640.
ChartArt TerryKinder
It's really a very tough situation to understand right now. I analyzed the charts the entire last hours with different methods and all I can say is that if the current uptrend lasts for 48-72 hours without too many greedy people cashing out over the weekend, we really have a new long uptrend established, like you marked with the green flags. All due to the positive DELL news today that they now accept Bitcoin via Coinbase.

But if too many Bitcoin daytraders don't hold and cash out of the small uptrend over the weekend (if price doesn't stay above $625) then we are back in a accelerated downtrend risk at least down to $610 for the third time.
+1 Reply
ChartArt TerryKinder
Today I just sold at a small loss, after the price started to go below 625 on Bitfinex and Bitstamp.

(First briefly 623 at both, then a bounce back to 629 -- I sold when it went back to 625).
ItisCalvin N.Bayrak
Woah! Where did that come from? This is TA. It will not be right all the time.

I'd ask you to make a better chart, but I don't know if you have the skills. Don't judge if you don't understand how TA works. It is a complex inter working that requires time. None of us get any compensation for posting on here and could choose not do. We do so to benefit the community and bounce ideas off each other.

A bad chart doesn't mean we should disregard it. We learn from it and see what exactly happened. Markets are dynamic beasts that many will find that they cannot tame from time to time.

Someone else was also bitching on DanV charts. Just because they are wrong doesn't mean you need to follow them. We are not here to give you financial advice. Read the disclaimers. Seek out a financial adviser or similar if you want real investment advice.
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