Some bearish observations on a weekly chart.

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
438 15 4
1. The last candle closed below the ichimoku cloud and the current candle is also below the cloud.
2. Bitcoiners are following a false trendline (dotted green) which is not a good trendline because it was drawn against a single wick from a flash crash rather than against the bodies of the candles. The real trendline (solid green) has already broken and become resistance.
3. Even the false trendline (dotted green) is being tested too much and looks like it's about to break. If it is broken, the next identifiable trendline on the chart is the solid blue line.
4. The volume is declining. The volume of the last rally was extremely low compared to the previous declines in this same price area. As far as I know there hasn't been a significant expansion in exchange structure away from Bitstamp since then. Actually the volume has been going down on Chinese exchanges so it should be INCREASING on Bitstamp .
5. The rsi overall is curving down. it shifting from an uptrend to a downtrend when it hit its peak in April 2013 and is making lower highers and lower lows.
6. The stock rsi is in a trend of lower lows, longer bear markets, and shorter bull markets. If the pattern is to be followed, then it is possible that the current 'bull market' is already over.
7. The weekly MACD went negative and the weekly EMAs crossed down for the first time since 2011.
8. The recovery looks ugly and choppy versus the recoveries of previous years which had neat and clean penants. The peak of 548 in April was breached with a decline to 537. The decline should have been significantly above the peak, for example 570 - not breached it.

Longs should hope that we cross back above that cloud really soon.
Hi Terrra, I have a question about weekly EMAs; it seems that they crossed down April 21th, but crossed up already, too. And that the last crosstown was in March 2013 - is that correct? Interestingly, they crossed down just after falling below your solid green line.
why is a trendline drawn against a wick false?
you can draw trendlines incorporating wicks or incorporating bodies of candles
If the solid green one will become a strong resistance line it will be still be rather bullish scenario. You think the dashed green line is completely "imaginary" ? the price has bounced off it twice recently.
TERRRA Asterix
Compare this to the other times the trend was tested in the past - it only touched once before bouncing strongly on huge volume. This time it's testing it multiple times and just sitting this trading weakly on low volume.
Ah, I thought that if the trend line has been tested many times it makes it stronger, but looks like it is the opposite. Thanks for your explanation. I am new to TA.
+1 Reply
segeln Asterix
you are right
the more a trendline is tested the more important and stronger it is.
Point 2 and point 3 of Terrra are definitely wrong
+1 Reply
I think Terrra's point is that a trend line that has been tested several times, with tests several months apart is strong, but if it is tested several times within a week, it is a sign of weakness. As I said, I am quite new to TA, so no opinion on such subtleties.
segeln Asterix
The "Rallyacceleration since 2013"-Trendline has been tested in April--June 2014 only once a month not several times a week.
As a test of a trendline doesn`t break the trendline it strengthens the trendline
TERRRA Asterix
this. previous tests have just been one little touch and immediately followed by massive volume accelerating into the next rally. now the tests are getting more and more frequent with less volume and no follow through. When the price starts 'grinding' on a trendline like this it is a good signal that it might break.
Thx for clarification. Now we are close to break your dash green trend line and some people on bitcointalk say this trend line is already broken.

Do you really think we go to the blue line anytime soon? Things are not rosy at the moment, but such crash still seems impossible now, imho. I was envisioning dropping to this line in about a year, when it will rise to today's price.

Any insights appreciated. I still have a lot of fiat that I can potentially invest in bitcoin, if there would be a good buying opportunity (so far have been buying in the 434-562 region)
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