Following a splendid bullrun which allowed me to sell close to my 1st targest, the Bitcoin price bashed its head on the $1000 ceiling and fell by $235. This slump ended the uptrend decisively and carried price well below my stoploss level. Stubbornly, I held on, waiting (and hoping) for a bounce from well-established Support-Resistance at $800. In retrospect, this would have been a much better level to place my stop. Luckily, it seems price has indeed bounced from this level, although the recovery remains touch-and-go.
I wouldn’t be surprised if we consolidate here for a day or two or three. My hope is that we then head higher for another crack at $1000. If breached, I expect a test of the ATH (all time high) at $1163, which is my 2nd target.
If the bears attack again to send the Bitcoin price back through $800, I’m resolved to exercise proper trading discipline and bail out.
Above is where the market stood as of the time of writing (14:10 GMT+2). You’ll note that this is an Hourly timeframe, instead of my usual Daily. Although I find the Daily best for filtering out noise, I will occasionally zoom in to lower timeframes to watch developments around key levels. As you can see from this chart, price reached a low at $765 before shaking off the bloodcrazed bears and putting in a higher low 7 hours later at $787.
The Bitcoin price has since put tentative whiskers above the downtrend line, and is holding around the $820 – $840 level. The MACD has crossed to the upside, giving us a positive signal – although such signals are more reliable on higher timeframes. A flimsy, two-bounce uptrend has been sketched in, and price may well bounce from there, or again from $800. The important thing for bulls is that it stays on the right side of that key $800 level.
Now, about the MA Voodoo indicator seen in the chart above. A fellow named Hellork was good enough to code it up and release it to the public. As the name implies, it’s based on Moving Averages but what’s interesting about it is that it plots signals (called Voodoo Dolls) well into the future. A cluster of these Dolls apparently indicates consolidation whereas a single Doll indicates the likelihood of a spike up or down.
I added it to my hourly chart for testing and can’t speak for its accuracy as yet – but it did give me a great excuse to try out a Halloween colour theme on my chart. :)
If you’d like to test Hellork’s indicator on your Trading View chart, you simply paste this code into the “Script Editor” and save it, then apply it as a indicator under “Custom Scripts.” The more people testing it, the quicker it can be fine-tuned. The recent charts in Hellork’s profile give the basic instructions for using it.
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Last modified: January 8, 2014 21:52 UTC