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 4) MACD
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:
TerryKinder
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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
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"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
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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.
ItisCalvin
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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
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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
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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.
ChartArt
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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.
ChartArt
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Update 1
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2 days later. Increasing bearish signals in the weekly chart. Only the BBImpulse is getting less negative.
TerryKinder
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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.