BITCOIN PRICE IN A CONUNDRUM
Bitcoin price broke to the upside, yesterday, in what looked like the start of another wave of advance. Unfortunately price action has generated much zigzagging and no progress today. We might have to abandon the trade.
Bitcoin Price Analysis
Time of analysis: 15h17 UTC
Bitfinex 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
The longer we watch the chart the more cautious we become. This analyst is apprehensive for three reasons:
1) Yesterday’s breakout buy signal did not form in the hourly chart – we took the trade based on a 15-minute buy signal but it has failed to materialize in the 1-hour timeframe. A sell-off example in the left of the chart shows how the 20MA pulling down through the 200MA can happen very quickly.
2) The 1-hour 20MA (green) is now starting to turn down – it may be because price is still consolidating but it may also be because the market is leaning to a sell-off. There are large sell orders appearing in, for example, the OKCoin 3Mth orderbook and a few hours ago there was a 10 contract order at every pip going up for a few dollars in the book. Somebody, it seems, wants to discourage advance or influence decline.
3) The circled area in the bottom left of MACD corresponds to the corrective advancing wave prior to the sell-off. Notice how it trades upward in a rising Bollinger channel (light grey) and then settles on the MACD zero line before dropping through the floor.
The current failure to advance may transform into a steady rising wave if the market can put the fear of a sell-off aside. But if the bears capitulate and massage the market into a decline there is space to drop to the 1-hour 200MA (red) or even through it. The danger to our open positions is unnecessary. Be ready to close position on a 1-hour candle close below the 20MA. Or close your trade now – while in profit – and re-enter if the chart gives a more convincing buy signal into a motive trend.
Never confuse movement with action. – Ernest Hemingway
What we see in the bitcoin price chart, currently, is not worth trading and watching it in the hope that it will suddenly accelerate upwards only has a 50% chance of not ending in tears. We need to see a clear signal. Any long trade should only remain open while price is supported by the red 200-period moving average. Buy-and-hold investors should take no action – even on a drop – until we have more clarity.
Bitfinex orderbook depth and Buy/Sell Volume: