Topic: Something, something, something, technical analysis - page 3. (Read 31170 times)

Intuition calls it again! I do this all the time! But did I have a Bitcoin position during that break out? Did I fuck! I sold my $600 buy-in at $601.41 yesterday, and had buy-in set at $567. I really am fucking awful at trading. Why can I generally be pretty good at calling market but so fucking damn awful at trading? What is it about my decision making process that has such a strong desire to LOSE!?

Bought in at $628, and am proud to admit that due to all my ill-timed faffinf around, I have 0.5 Bitcoins less than I had when I sold at $645 before the correction down to $538......lowest I bought was $555.....sold at $540.  

Going offshore today...be gone for weeks.....probably won't be in position to sit staring at charts and make 'judgement' calls and try and outwit the market. It either trends North from here, or hits $750 - $800 and is smashed back down for C leg of DanV's Wave 4 correction.

I'm bullish -- soon -- but this last leg looks like a fakeout. I think we might correct down from here before approaching that target. Still looking for 580 level, unless I see a breakout up first.

Intution, ah that old chestnut.

The indicators and common sense all suggest that Bitcoin should correct a bit from here but my intuition says that that $615 target will be taken out and then some. B4 or after a correction I don't know, but I am finding it very difficult to get my heart behind the bearish cause at the moment.

As I type, all the rampy, leveragey, fake volumey exchanges are bursting and squeeling to go higher....but Stamp won't let them. If whales on all the other big exchanges think that Bitcoin is such a great buy at these prices, why aren't they buying on Stamp?

Another very simple reason for much smaller bubbles is a sheer amount of money it would require. I mean, raising the current price X to 2X would require twice as much money as would be needed to raise price from 1/2X to X. This is of course very simplified, but you get the idea: e.g. price cannot raise "as easily" from $700 to $1400 as it did from $350 to $700.

Thanks for the kind words. Keep in mind, my initial remarks (about how far the next "bubble" will go) are comparably off-handed. I don't have the tools to predict the long term price, and I don't trust the tools that I know to exist (log linear extrapolation), so what I believe I _can_ do is short and mid term predictions and calculations.

That said, the main reason that I do believe bubble size growth will decrease over time is that I believe that as the market gets bigger, the market also becomes more professional, which also entails it becomes more opportunistic, which entails profits will be taken earlier (because if you don't take profits comparably early, someone else will, and suddenly there are no profits for you to take anymore - i.e. a game theoretic understanding emerges that profits need to be taken earlier as time progresses), which entails the bubbles will overshoot less than they did in the past.

But I'm not firmly committed to this, or rather: I don't really base my trading decisions on this (relatively vague) intuition, which in a way means I don't trust my own intuition. It's just that I trust others' intuition about the 10k coin in 2015 even less.


Update: Watch out for $614 to $616. Daily SMA200 (which threw us back earlier this month) is sitting there right now, and it is the previous peak from mid June. Won't be trivial to break it, I'm afraid, but if we make it through it, we'll probably pick up speed.

Thanks again Oda for the great analysis as usual. Bare with me for a minute while I poke the subject few analysts like to touch. I am wondering why everyone is so confident about the next run up being smaller in % than 2013. Imo the next run up starts when an ETF is released and all of that pent up non technical buying demand is finally provided with their preferred buying option. Once that starts I do not see this run up playing out any differently than the others. Something to consider as well is just how different the medias opinion is now vs 2013. We did not have a resident spokesperson bloomberg tv in 2013, that would have been unfathomable.  For these reasons I believe the market is still far too small of a market cap to absorb the pent up demand and corresponding usual frenzy without moving the price at least over 5k, probably 10k. This will happen within a few weeks of the etf release so I am also optimistic that it will happen this year.

Thanks! Really interesting to hear that bit about 2012.

I know the history 'first hand' since last year, and have done some reading into the 2011/2012 era, but it's different if you experienced it directly or not. The entire Bitcoinica debacle is something I only know of vaguely, and it almost feels a bit like "grandfather reminisces about the war" when I hear the 2010/2011 members talk about it... and it's aweseome, I hope I can do the same in 2016 for the new members "I will never forget the SR coins auction in June 2014, kids" :D

Great observations, oda!

One thing I would like to point out. The Feb '12 bottom after the $7.22 high (the lower one) was caused by a trader who thought he would slam the market and make all this money. He even gloated about it on this forum with screen shot and all. Big mistake! Someone else quickly short squoze him in one of the fastest 100% swing volatility we have seen. This doesn't change that it happened, and it still stirred the psychology in the market, so by default, valid to use the data, but it was something that wouldn't have normally happened without the help of the #2 worst exchange (maybe #3?) Bitcoinica.

I don't think trying to predict the timing of the next bubble is very useful. History rhymes etc.

Excellent new post Oda. I agree on almost all points. I dont know if we will test50 and 62 fibs of bottom again, since we did it so long already after the first leg up. But i do expect that we will have another upward movement soon. I also agree on ATHs. They are not around the corner and they will always be of less magnitude than they were in the past.

Well we know Barry Silbert is hoping to launch his exchange this summer and his ETF in Q4.

The Winklevoss ETF will likely be approved this year too.

Yes, it isn't a gloomy prediction and in fact I agree with your prediction for the size of the next ATH. But I don't agree with the timing.

I only know that more than one ETF has been under consideration for some time now. If and when it gets approved, we will see whether it does in fact lead to another 'explosion event' or not.

Keep in mind, there were almost 2 years between the 2011 ATH and the next one, so having to wait for a bit more than year to get to the next one (especially after seeing two in quick succession in 2013) isn't exactly a gloomy prediction.

You list 'market explosion' events such as an ETF being approved or a new 'serious' exchange popping up. We know these things will happen in the remainder of 2014, so why do you say a new ATH rally will not take place until at least next year?

Why I'm still long as a default position: fib levels and the uptrend so far


Okay, time for another "serious" TA post, after a bit of a break. I've been asked a few times if, and why, I'm still long currently, despite the recent price action and uncertainty about the near future.

I should mention that I did make a small number of trades during this swing (since the June 1 peak), but they were all purely momentum based, when it became very clear that a move down was picking up speed. However, perhaps the most important question for a swing trader is "what is your default position", i.e. whether you take profits in USD or BTC (in this market). For me, that default position is  BTC currently, and I'll explain why in a moment.

First, though, let me clearly say what I am NOT going to argue for: a meteoric rise in the near future. Here's what I wrote (a bit too angrily maybe) in another thread, where someone posted another one of those "$10,000 USD next year" predictions:


Note please: I don't completely rule out another parabolic rally later this year, but I'm far from sure it'll happen. In fact, I'm slightly more inclined to think the next ATH rally will only happen next year at the earliest, and probably not to a "moon" number like $10k, but more likely a doubling or so of the previous ATH, which would still be extremely impressive.

But none of that matters right now. I'm simply trying to figure out if, right now, it makes sense to sell (to protect the USD value of your position), or whether the mid term direction is more likely to be up.

* * *

My analysis is based on the following two premises. You don't need to agree with them, but if you don't, you probably won't see much value in the argument I'm going to present.

1) $340 was, most likely, the capitulation bottom of the 2013/2014 bear market.

2) The period following the bear market, now, will be somewhat "reluctant" in moving up, with long periods of stagnation and possibly some serious setbacks.

I have argued previously why I believe 1) holds, won't repeat that now. I believe point 2) holds mainly for the following reasons: a) because the bear market was a lot more crushing than for example the short recovery period after the April 2013 ATH, b) because there were a few seriously disturbing news/developments that the market is still recovering from, mainly: mtgox, and uncertainty about China, and finally c) because no new "market explosion event" has taken place yet, that brings in an abundance of new fiat.

Examples of point c) are for example China entering the market big time in the 2nd half of 2013. What an event like that could look like now is, for example, the approval and listing of one of the ETFs, a new "serious" exchange backed by "old money" that brings in new types of investors, or a large enough country suddenly developing a taste for investing and/or using Bitcoin.

Those are the premises, on which my following technical arguments rest. In other words, I assume, from point 1), that we are in principle moving upwards, from point 2) that this is only going to proceed slowly.


Fib comparison #1

The longer historical comparison.

First graph shows the immediate recovery after the extremely crushing 2011 bear market. After the bottom of around $2, the first swing up ended at around $7. Then followed a retracement of that swing to 50%, where it stayed a long time, with and additional spike even deeper to the 62% fib level.





Next, the recovery after the July 2013 bottom at $63. Swing up to $100, followed by retracement to, you guessed it, 50%, and a spike to 62%. Now, to be clear: the recovery in mid 2013 was a lot smoother than what I expect to see now, but at least in terms of fib levels, we tested those two then as well.





Finally, our current view. The situation looks a lot different because of the intermediate period (after the assumed $340 bottom) in May, but from my perspective, what matters is how far we have progressed from that bottom. And as you can see, in today's situation we're not even near a 50%, let alone a 62% retracement. Which is why I'm not really worried yet.





Fib comparison #2

The next is pretty much a fractal view of the above. Let's compare the May consolidation period to the current one. After the $548 peak, most of May 2014 saw a period mostly of stagnation, that touched (surprise) 50% and 62% fib levels again.





Which is precisely where we are now again, in terms of fib levels.






The recovery so far

Here's another way to look at it. The following graph is a series of the intermediate highs and lows so far. Since the $340 bottom, we can see that a series of higher highs and higher lows is forming, in other words, an uptrend.





Marked in yellow is the range that could invalidate that picture. If price falls below the previous low of $538 on June 14, I won't automatically assume that we're back in a bear market, but it will be a sign for me to start questioning my default position. Should we hit, and break through, ~$530, what matters then is how price behaves afterwards wrt to the fib levels I've mentioned above. But that's another post, should it come to that.

I guess if your "normal" is hilariously, overtly corrupt, then sure.

In America, we like to keep our corruption slightly more opaque.

Or perhaps he was a scammer?

Indeed they do. Which is why it was all the more telling that this chap (with a lot of Bitcoins to sell) was selling these coins at a rebate (the opposite of a premium) for those with deep enough pockets to stump a minimum of 10K. The '5%' thing is a number I am just putting in cos I don't remember the exact amount. I do remember kicking myself that all my liquidity was on Stamp and that I wasn't in a position to take advantage of it.....I could have just flipped them right away in lower quantities on LocalBitcoins itself for a tidy profit.

Good grief. 95% of all bitcoins sell for a premium on LocalBitcoins.

This is as good as you got?

In normal countries that's exactly what would happen. The confiscated goods sold to right people, for half price, and dumped to market immediately. The wrong bidders won't take part in the auction because they failed to fill application forms correctly or something like this. But US is not quite normal country (yet  ), so I don't really know.

I don't know this and I have no proof....

.....but I have seen miners going on UK LocalBitcoins selling BTC at around 5% below Bitstamp, but with the minimum trade size being 10K GBP.