Bitcoin / Dollar Daily (20.07.2014) KUMO vs MACD

BTCE:BTCUSD   Bitcoin / U.S. Dollar
The Bitcoin/Dollar Daily Diagram Technical Analysis Training shows the following:

BTCUSD has made a smooth downtrend movement from 640 to 604 last tree weeks. There is a big ascending triangle with a long term support green line and a small descending triangle with the red resistance line. In the last tree weeks movement the Kijun Sen (blue line) is supporting. The weekly diagram shows neutral trend.

So the first thing I see in diagram is that BTC follows the resistance line downtrend with Kijun Sen supporting. MACD is bearish and RSI has reach 50.

We have no special candlestick pattern. The price is above the KUMO, the Kijun Sen (blue line) but now it tries to break the Tenkan Sen (green line) down.

There is no special pattern except the descending triangle. The fib from 436.51 to 655 shows the 0.764 @ 604.05 target.

So it seems like shorting for 604.05. If then BTCUSD get into the cloud next target is 572.04. Stop loss above the red resistance line. If it breaches it then long above Tenkan sen for 655 first (this will force a long term reversal pattern).
TLDR: Use the RSI and MACD. Don't rely too much on the Ichimoku.

Useful indicators show you the same trend when you look at the 20hour, 21hour, 22hour, 23hour, 1 day, 2 day, 3 day chart. Ichimoku is too unreliable. Ichimoku is always jumping around from showing you a perfect uptrend to a very bearish downtrend.

The MACD and the RSI are much more reliable. The MACD is very slow and lagging, but much more reliable than Ichimoku. Meaning the MACD is showing you the same trend overall in different time-frames. The MACD is slow, because it's only showing you an uptrend when the uptrend already started and showing you a downtrend when the downtrend already started in a big way (some times too late).

The RSI is basically doing nothing else then showing you the current price in a distorted way. You can see this, when you double the standard setting of the RSI from 14 days to 28 days:

That is why the RSI is so reliable, because it's just showing the current price in a way that makes it easier to read that the trend is changing. When you change the RSI from the 14 day standard to 7 day you can see uptrends and downtrend much earlier:

And when you change the RSI to a setting of 3 days you can see (if you know what you are looking for) up to three weeks in advance the next large uptrend or downtrend taking shape, before it's visible in the price to the layman. I repeat. You can see with the RSI uptrends and downtrends up to 21 days in advance. Just look at my example. When you only count the blue signal it's still 14 days before everyone found out that the price is going up.

Here is a comparison with the MACD. The MACD is not as fast (not days in advance) like the RSI. Several times the MACD is even behind the trend, especially when a downtrend starts, but it's nice to use the MACD as confirmation of the trends the RSI shows you so early.

P.S. I'm using a version of the MACD where the colors change when the trend changes:
+2 Reply
d.vezeris ChartArt
Thank you very much for your time. I am using Ichimoky because usually when it cross the Kijun Sen above or under the KUMO is a reliable sign for a long term movement. On the other hand trend lines show me when consolidations are starting. I use MACD & RSI for trend confirmation more or less.
d.vezeris d.vezeris
In your diagram before the blue circle there is a green. If you setup from the time of green circle before blue, would you wait so long for the longterm or you could thought that was false? The RSI3 is fast but is it reliable? Anyway thank you again for your time. (P.S. How do you can insert diagrams in your replies ?)
ChartArt d.vezeris
The green circle would have been the best time to buy in May. But since the market first had to come to an agreement where the next direction is - and as you can see the lagging MACD still showed a downtrend there - therefore the first uptrend spike was very short while the bottom established. But then followed another buy signal which I marked as a blue circle.

The uptrend was also visible using the default 14 day period:

P.S. You can add charts by creating a screenshot with the green button on the bottom right of a chart. Then past the new screenshot link in the comment by clicking on the very tiny grey chart icon in the top right corner of a comment box.
d.vezeris ChartArt
Thank's for your reply. I will try your study for some time and some shares/pairs and I'll tell you the results.
ChartArt d.vezeris
Looks like I'm not the only one who discovered that the RSI with a short-period is useful:

"How I Trade With Only The 2-Period RSI"
ChartArt ChartArt
P.S. The 2-period RSI strategy mentioned in that article was developed by Larry Connors. His own indicator, the "ConnorsRSI" - has been added to TradingView some time ago.

P.P.S I came up with the idea to use a 3-day period RSI by my own testing. Seeing that experienced Wall Street traders use the same strategy shows that it's useful.
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