BITFINEX:BTCUSD   Bitcoin / Dollar
What is the definition of Technical Analysis? From Wiki “technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume . Technical analysts believe that prices trend directionally, i.e., up, down, or sideways (flat) or some combination. The basic definition of a price trend was originally put forward by Dow Theory.”

So the question is…does technical analysis work on BITCOIN             . The answer is ‘yes’…very much so. Straight from the definition, TA forecasts the direction of price through the study of past market data…primarily price and volume . BITCOIN             has everything equity or currency has…price history and volume . What is the cause and effect of price? Supply and demand , which is often controlled by human psychology. BITCOIN             ultimately has a fixed supply, with changing demand due to underlying fundamentals and crowding of human psychology, which can be represented with chart patterns, and price trends. By studying the past history of the charts, we can most likely be able to predict the future.

BITCOIN             is still a relatively small market, and in my opinion a lot of buyers will trade the price of BITCOIN             technically, which is shown in the charts and by price action. Lets look at the price action of the last year. Levels of demand and supply, support and resistance can clearly be seen. Also, when the moving averages are pointed down, selling occurs around the 50 day moving average and vise-versa when then moving averages are pointed up, buying occurs around the 50 day moving average. This clearly points to technical buying areas. I have to admit that I was a technical buyer of BITCOIN             myself. From September to May you can see BITCOIN             was in a downwards trend, once the price and moving averages leveled out we had a break of this trendline with volume and technical was a solid entry point. As you can see now we are forming a nice uptrend with buyers picking off the 50 day, with overhead resistance around the 700 level. Once volume (demand) can push us through 700, BITCOIN             could be on its way to 1000 again. If you want to trade BITCOIN             follow price and volume just like any other equity.
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