Topic: Consolidating Trend -- A Page From Arepo's Notes - page 3. (Read 6080 times)

1-day scale @ bitstamp


http://i.imgur.com/eAdJQ6j.png

===

don't worry guys, lots of selling pressure, but the bids keep filling in. as long as we stay within the bounds of the larger 1-day scale ascending triangle, and continue to see decreasing volume, we're still consolidating. no call on the direction of the breakout, yet, but that support is showing incredible strength and i stand by yesterday's call of 3 - 5 days of consolidation from 08 Jan. in other words -- don't panic! the market is still deciding on a direction.

a closer look:

4-hour scale @ bitstamp


http://i.imgur.com/ofOOtcC.png

===

in the last 4-hour period, which has about 8 minutes left, we see a high-volume 'doji' candle (long wicks, small body) associated with large volume. this is a classic reversal candle. on this scale, it corresponds with a bounce off of the moving support of the larger ascending triangle. so long as we don't break below this candle today, the model is sound.

keep in mind that these calls are for swing traders only, and are all micro-term. this 4-hour-scale bounce is not bullish for the coming week, but this selling pressure isn't necessarily bearish either. this is all small-scale fractal behavior within a consolidation pattern within a larger trend.

also, just a note for the curious, since triangle consolidation patterns are fractal patterns, they often have this tendency to break out into larger (longer timeframe) triangle consolidation patterns, finding higher or lower supports each time, so that the final formation can be described as a number of self-similar triangles embedded within one another. in the 4-hour diagram you can see the smaller ascending triangle i was tracking earlier, which did decisively break downwards, but having made a higher low, is forming into the ascending triangle we now see on the 1-day scale. neat, huh?

--arepo

I thought the same a few hours ago.
The problem is this does not look like a bottom.
No strength, no rebound.

Any update?

I see. Guess we have pretty similar trading strategies and goals then.

I am not aiming at fiat profits -- not as an end goal, anyway. I am interested in fiat profits in a bear market only to accumulate coins.

I didn't mean to say sitting out the entire correction/consolidation phase -- I have been actively trading. I meant the consolidation I expect from the most recent top (995->765). If I weren't working, I'd probably trade more of the small swings -- otherwise I am comfortable in fiat right now. I've got some wiggle room from my last sells and don't expect a re-test of the recent highs in the short term.

I've always got cold storage. But it's currently only 25% or probably now closer to 20%.

So would you consider yourself a trader (aiming mainly for fiat profits) as opposed to a "trading investor"?

I'm just wondering because the thought had of course crossed my mind as well, to sit out the entire correction/consolidation phase in fiat, but to me it seems nearly impossible to do so without taking a hit to your total BTC holding.

I mean, say you would have optimally sold at ~1200. How long to wait til you're convinced the correction is over? 1000? 1100? Anything later than that, and your total BTC position is reduced. Which is okay if you're agnostic about BTC's long-term price target, but if you assume that in the long run BTC will worth much more, it all becomes a game of what, I think, Rampion called "land grab".

So I don't really feel comfortable sitting it out entirely, only during the most obvious and violent downward movements do I turn (more or less) full fiat.

My position was being steadily adjusted all day Sunday. I had seen enough signals not to wait for the trend to break. At the least, a minor correction was in order -- though I am feeling more bearish than that. I've played two bounces here, mostly for kicks, but my money (outside of cold storage) is generally in dollars while this consolidation plays out.

Was just curious what your take was since one of your signals appeared to have triggered.

Lovin your work Arepo.. great thread. Posting here so it's bookmarked and i can keep an eye on it.

Very good... You noticed that breakthrough as well But what to make of it, huh? We're already above again, with exactly one 6h candle in betweedn opening and closing below. By my count, that means there's a good chance we'll revisit this level again in the next days, so: low 900s very well possible.

But apart from that? I've said before, I consider the most likely end of the post-ATH decline/correction/bear market to be in late January/early February, but I also said I can be convinced otherwise if a clear reversal reveals itself. It's still a possibility in my opinion, depending on how we recover from yesterday's drop.

Don't know about you, but I'm not tempted to make a major adjustment to my position yet. Then again, as I said before, there are different trading styles... frequently, with smaller amounts vs. seldom, with larger amounts. I do the latter, almost exclusively. Waiting until I'm sure of a major swing, then put in one or two larger orders -- worked extremely well for me this December.

triangle consolidation patterns, or oscillation patterns, are actually extremely common on all scales. i'm not surprised you noticed a few amongst all this volatility. unfortunately, since these patterns exhibit upwards breakouts and downwards breakouts rather chaotically, simply spotting one doesn't tell you much about price direction. combined with other methods that do, however, spotting and measuring these shapes can help you anticipate the timing of a large price movement in either direction, which is obviously a useful trick for speculators

--arepo

update!

calling the short-term bottom here -- we will likely not see prices below $859/$765 (gox/stamp) for the next 3 - 5 days*.

===

10-day hourly scale @ BITSTAMP


http://i.imgur.com/Tl3IZlp.png
price plot for reference

===

1) the amplitude of oscillations in the Chaikin Oscillator is correlated with price volatility. since peaking price volatility is a reversal signal, an increasing range in these data can indicate trend exhaustion.

2) we can look at the volume data as well, keeping in mind that peaking volume is also a reversal signal. the 1-day red candle that was Monday, 06 Jan 2014, UT, had the largest daily volume in the past 18 days.

--arepo

*timescale based on a predictive fractal model of the 10-day price

I agree the volume is all we really have and good to know you use that as main weight,  I'll go back and read up your earlier work

I did notice the ascending triangles forming that broke us out of that previous downtrend and led us into the 700s.  But these can be like constellations where we kinda see what we want to see most times

i hear what you mean. i find a lot of the trappings of the trader universe like emas, donchian channels, and marking a chart up with every possible fibonacci retracement to be a little distracting.

i work with a small set of classic indicators including the ones presented in the OP, as well as volume data, and fractal analysis, which is related to Elliot's wave model. fractal analysis attempts to find consistent patterns in the price function which can be used to better understand the "price environment". these patterns include triangle consolidation patterns, double-tops, cusp-tops, and bubble patterns (oscillation model). as for classic indicators, i find that the best indicators are the ones that incorporate volume heavily into the algorithm, because volume is one step closer to the inflow/outflow data you talk about.

and while i'm sure that these data would be a useful indicator in some sense (i'd expect it to look like a transformation of the mass index, peaking at times of of market uncertainty and reversals, correlating with peak in- and outflow), i think actual trade volume is far more important. i have often said that the only two important sets of data are the price function and the volume. i treat these data alone with a scientific approach and strive towards the simplest models that are effective at anticipating price behavior.

that being said, i have found empirically that they have "yielded returns better than chance during the time period which i have employed them". the problem of induction, of course, forces me to consider that this may simply be due to chance so i'm not claiming any superpowers here regarding predicting what is an inherently stochastic function, the price function.

--arepo

Charts on bitcoin exchanges is fun and I got roped into them for a while but all these hours would be best spent finding out the inflows/outflows of BTC & fiat per exchange on an hourly basis.

In contrast, a stock like Twitter goes IPO and many of the variables are known. The amount of stock doesn't just get bought up on one exchange and then sold on another with both having limited constricted funds thus showing rapid dilution and scarcity.  The float available is public and also its % of the whole allocation with insiders having to broadcast their selling (kinda like cold storage doing 'days destroyed' and knowing they are being sold on X exchange) And there are no limits or friction on the amount of funds that can enter those markets

I bet knowledgeable eyes watch the blockchain to see where and when large amounts of bitcoin flow in and out (are the addresses public?  all of them?)
but no one will know the amounts of funds going in and out which would show appetite for support/pump/crashes


as I type, I thought we'd be in for a 770-810 range for a while but we slammed through that on btc-e and hit 751.

charting this is folly, more transparency is needed first in this fog of war

i'm sorry, but i can't give out specific price targets for free, but i can quote you this:

I'm interested in your target price for capitulation. Would you say that the coming high volume capitulation would have us at lower lows?

I'm always around, whether I post or not is a different matter     ..will keep my eye out for sure

ah Michael! it's nice to see you around these parts again i appreciate your support, as always, and i hope my work helps you profit, indeed. i think i'm about done with this issue of "Arepo's Notes" but keep an eye out for the next one!

I'll make a donation to you arepo if I profit, at this time I'm happy setting my own price targets, but your comments have been helpful as always..