I posted this study on the Economics section but I thought perhaps Newbies would like to get an idea of the current state of Bitcoin.
Hi everyone,
This is my first post on the forum and I just wanted to share some technical analysis on bitcoin price.
The price as time of posting is $358.05 USD.
Last year in December the same coin was valued at 3.24 times today's price peaking at around $1160, or close to it.
Such drops in bitcoin price are not new in the history of the coin. Almost and exact drop happened at the beginning of 2013, when some people too were calling for the end of the coin. A massive selloff from $250's to the $70's. The factor is about the same as the current drop in price at around 3.4.
Of course, a drop from a thousand USD to the hundreds will get your attention. Percentage wise they are equal. And I am sure if we go back to later years we will find similar drops.
OK, so now to the current state of the coin based data form the surge in price from Nov 2013 to today, chart weekly:
1. The coin has been on an absolute downtrend, regardless of the little price bumps the trend has not been broken even once. SAR points indicate this. Started Dic 16th, 2013 and even today's data shows a bear trend.
2. The coin has burned through pretty much every weak support levels leaving behind three strong resistance points. $340, $440, and $624. The coin has spent about 8 weeks floating around these prices while burning quick though the spaces in between. The next bottom is around $200, and then $86.
3. The probabilities of heading to $86 are about the same as heading to$624, see the chart below. But the odds are in favor of heading higher to $440. Without sound historical data around these levels we are left with speculation only. So we would need to think or look for catalysts that will either drive the price down or up. I will leave the speculation to the forum to generate ideas.
4. Bitcoin's falling prices have charted a very nice pattern (or two)... One can immediately see what we call a Falling Wedge. And perhaps a Pennant. These tow resolve harshly on either direction up or down. Tracing the lines and we conclude we are almost at the end of this wedge or pennant and the price of bitcoin will resolve hard in one direction. Again, we need to look at what would cause the price to go up or fall.
5. Tracing both patterns we can generate a couple coin prices to keep an eye on the next couple weeks. We want to see a bounce of $305 if there is such drop, and if it doesn’t hold, we want to see bounce from $252. Hopefully it doesn’t have to dive that low but it would be a great opportunity to buy coins.
6. Ok, enough of coin prices for now. MACD, a buying or selling indicator, is about to cross to indicate a buying opportunity. This has to resolve first before buying coins, unless you want to bet on a positive outcome. RSI, which indicates oversold/overbought conditions is pretty much in a very very oversold condition. In fact, on 9/29 RSI touched a level 30, which indicates greatly oversold conditions and since it has bounced. Both of these gives me an indication of a rally or at least that the coin can rally a healthy push from here.
Now, in a nutshell, the coin has one or two last support levels to bounce off $305 and $252. I, of course would be a buyer at these levels, but MACD and RSI tells me the coin is in a healthy mode to rally. Oversold is a technical state that stocks and coins don’t like and usually bounce from. So the coin may not drop that far.
At today’s level I would hold the coins we have and look for confirmation of a rally on MACD and SAR points. I would buy big on confirmation of a SAR only. MACD confirmation may indicate a small rally to $440 or even $624 before heading back down again.
And to leave with a sense of historical comparison, in 2013 the coin also created a falling wedge with a bounce around the fib line 0.764 ($69) before rallying to $1100’s. Why is this important? At today's price and on the last 6 weeks, the coin has bounced and played around $340. Which for this last rally, it is the Fib Line 0.764. The same level before the huge huge rally last year.
Thanks, and let me know if you have any questions. I’ll be more than happy to create more charts, or to share ideas on trading. Also, I would love to hear ideas on price catalysts.
The price of Bitcoin at the time of posting is $360.57 USD
*Edited in bold
