In the above daily chart of the Bitstamp Bitcoin price in USD, we’ve got blue and purple volume bars semi-visible in the background. Also shown are the Fibonacci levels, a downwards trendline, a tentative channel and the MACD indicator. For an explanation of the Fib levels and MACD indicator, please see the 1st section of my previous post.
I’ve switched to using the Bitstamp price instead of the Gox price. The exchange I intend to trade on uses the Bitstamp price for reference. This link should take you to the exact chart I’m using over on Trading View – I recommend this site. They give you live Bitcoin prices (plus charts for a whole lot of other exchanges and currency pairs) and more technical analysis tools than you’ll ever need.
At the moment, the Bitcoin price is bumbling along sideways on low volume. I suspect it’s going to pass through that downtrend line without much fanfare.
Although I’m currently bullish, I’m still waiting for a signal (or ideally, a confluence of signals) to enter the market with my trading capital. As per my trading plan in the 2nd section of last weekend’s post, the signals I’m looking out for are:
1) a break through the downwards trendline on high volatility and volume,
2) a MACD buy signal. This seems to be forming as the histogram approaches the zero line and the signal line flattens,
3) price turning down then bouncing from a higher low, or
4) major Bitcoin-positive news.
Speaking of news, so far the announcement that Overstock will accept Bitcoin next year and the establishment of Indian and Indonesian exchanges has done nothing to move Bitcoin price. On the other hand, the transference of ~120k Bitcoin from a long-dormant wallet has spooked a few people but had no discernible effect on price.
This combined lack of reaction, plus low volume, suggests the market is sleepy at present. While many of us involved in cryptocurrency expect a continued rise in the Bitcoin price during 2014, my plan remains to wait for the chart to confirm the end of the downtrend and present some solid buy signal(s).
Disclaimer: if you decide to follow my trading plan and it all goes to hell for whatever reason, it’s not my fault. Anything can happen in the markets, so always do your own research, use stops and only risk money you can afford to lose.
This is a part of the Cryptocurrency Investment Club by CryptoCoinsNews.com.
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