ronfkingswanson
Long

A study of identifying the end of BTC bubbles with Money Flow

BTCE:BTCUSD   Bitcoin / Dollar
1392 8 23
Thanks to our prolific @LazyBear, who has scripted a number of excellent indicators, I was introduced to the Twiggs Money Flow , which shows accumulation/distribution much like Chaikin Money Flow , but with a few tweaks. To quote, "Twiggs Money Flow signals accumulation if above zero, while negative values signal distribution. The higher the reading (above or below zero), the stronger the signal.As part of my attempts to identify whether the recent low of 340 and rally since then support a continued bullish trend , I finally zoomed out to the Daily scale, and noticed an obvious signal from Twiggs that hasn't occurred since July 2013             , when the April             bubble took its last dive and the rebound started a new long-term bull trend.On this chart you can clearly see that since the end of that bubble correction, there has not been a single daily period where Twiggs Money flow has shown distribution overtaking accumulation until the recent April             2014 decline and bottom at 340. What that means is buyers have been in control for the entire bubble, including every deep panic selloff. Which makes sense, if you think of a "bubble" as an unsustainable distortion of price upwards (from the median growth line) due to intense buying pressure.The correlation with the price action across the Bollinger Bands , and the low RSI trough, all align with this final selloff signaling the bottom is in.Note: this is data from BTC-e, and a similar study with these indicators for Bitstamp or others may not show the exactly the same formations. But in general as all exchanges follow each other closely (especially at these scales), this analysis should be informative, whether or not BTC-e leads or follows the other exchanges.
what is "RSI (14, hlc3)" ?
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I am a new user. How do I add Twiggs Money Flow since I di not see it listed among the indicators.
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Hi Ron. Thank you again for this excellent analysis. I got my drop as mentioned in my post above - taken some profits, still a bit short with fairly tight stops to see if continues drop, and get out with more profits if not. I note that price has dropped (slightly) below median line. Is this at all significant? Many thanks and best wishes, Nic
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Zooming out a bit further, to the rally and correction of August 2012, we see an obvious time period between rally peaks - 234 days. If such a period holds true going forward, and the current logarithmic trendline is to continue, a projection of the next bubble rally could be in July 2014 and reach a new ATH of $4800-5000. Obviously this is a wild speculation this far out, but if this market is going to continue to be driven by certain market makers, it's a plausible scenario
snapshot
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if You say long it has to be long :) i'm long too
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Thank you so much for this. Very interesting and plenty of food for thought. I'm short to catch the final price drop (probably smallish - if it happens!) but with tight stops.
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Very informative - thanks.
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Very interesting!
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