With a little spare time on my hands today ( Google having issues today...ugh), I thought I would take the opportunity to review/comment on Bitcoin's price performance from a higher time frame perspective. Here then is Bitcoin's Daily price chart (Finex) over the past four months with notes and levels.
Looking backwards: As has been frequently commented on, experienced a rather well defined rally through the spring of 2014 as price broke out of a narrow sideways channel near $460 (May 20th) and didn't stop its upward surge until both its price pattern objective and the 200 were comfortably tagged (and even briefly surpassed). This gift of a trade netted +40% returns for even slow traders like myself and I hope those reading these posts made some nice capital gains on the event. There were a few very clear signals that the market was getting over extended (Willy very 'stupid', momentum divergence) so expecting further upside appreciation may not have been realistic. Indeed, with the recent break of the important short term lows at $620 (confirmation of a daily ) I feel that trade is now over and we must now start to look forward and anticipate where we may be headed next.
Looking forward: Considering momentum's very reading at the moment, new purchases are on hold for the time being. I have been making the case that I will only buy more if/when momentum and bottom at either the 38.2 or OTE long zones and I am personally sticking to that strategy. We still are not at those levels and momentum and are no where near bottoms so its a big hurry up and do nothing for me at the moment.. Indeed, one could very realistically be short from the $620 fail (with stops at new highs - $685.01) looking for both a '1st stop' target tag (38.2 Fib cur $553.21) and ultimately a test of the Optimal Trade Entry (long) zone (61.8 to 78.6 Fibs or $471.79 to $413.83) before this correction is finished. Since we really only want to take trades that have at least $2 of reward for every $1 of risk taken, I feel the trade could only be justified if one were to use the OTE long zone as your target. Specifically, a 61.8 fib target $471.79 would imply a little more than 2:1 reward/risk setup. The trade itself is going to take patients & discipline in waiting for those levels to be hit. Indeed, at present price is contained within a moving average 'sandwich' (13ema/30sma) and it may take some time to break out of this pattern itself. Having said that, if one has the patients and the setup is in your trading plan, imho it isn't a bad idea at all...
Cheers all and hope it helps
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