Yet one more weekend where the Green Light is NOT green.
Why the light is red this weekend?
The Weekend Dip strategy was to take advantage of a recurring pattern in which when there was a downtrend (defined very specifically) where way more often than not you could consistently earn a profit from doing trades by selling on a specific day and buying back after certain moves occurred. There was this pattern where something like out of eight or nine weekends where the Green Light was lit, all but one resulted in gains. Of course the timing on buying back made the difference between nice gains versus very nice gains.
The very specific definition is to wait until Wednesday night (West) / Thursday morning (East) and check the high for the previous seven days. Then compare that to the high for the seven day period prior to that. If the most recent 7-day high was lower than the previous period's 7-day high, then a week-to-week downtrend was occurring. When that happens the Green Light goes on. Following the "Weekend Dip strategy" meant selling coins at that time (Wednesday evening in the West, Thursday in the East) and waiting for a selloff. Then hold on until the drop starts to inch its way back up, maybe recovering to about a third or a half of the drop. If there is no recovery happening, then let it ride further into Monday if the selloff continues. Oftentimes the best time to buy back was late Saturday evening (West)/Sunday afternoon (East), or later.
Following that strategy when the Green Light was on would pretty consistently return like 5% or more (sometimes a LOT more, sometimes approaching 30% with perfect timing).
What kind of killed off the trend is that it became a trend. And more people traded it ... to where even a 5% drop was getting snapped up by buyers with funds ready and waiting. The trend worked consistently way back when nearly all funding to Mt. Gox occurred with wire transfers. So if you are in the Europe or the U.S., any wire sent on Friday arrived too late for Mt. Gox in Japan to process it until Monday. And any wire sent on Monday wouldn't get processed until Tuesday. And the combination between U.S. bank holidays and bank holidays in Japan often left many three-day weekends as far as no effective transfer between the U.S. and Mt. Gox for several days. But it seemed miners, many of whom were over-invested in GPUs and with electric bills would sell 24x7, regardless of the price. When Bitcoin currency was inflating at an annual rate of 50% or 33%, and 50 BTC per block, that meant a ton of coins were selling on Friday, Saturday and Sunday -- and no bank wires were being credited during that time. Trader's were still leery of keeping lots of funds at the exchanges so there just wasn't many USDs sitting there ready to be put to use, at least not for just a simple 10% or 15% weekend dip. (because if you used up your powder on a 10% gain you might miss the more attractive 35% rollercoaster ride.)
Those days look to be behind us, but just like this past week's $49-ish to $34-ish dip, big swings still can occur. More often than not they occur over the weekends. But big rises can occur on the weekend as well. So waiting for the Green Light basically was a way to lessen the chance of a big rise occurring as rallies with huge spikes up didn't usually emerge during the middle of a week-to-week downtrend.
