5-26-2014 Bitcoin chart update. Target 610 and 710 USD/BTC
This is my first post since I made a post on r/bitcoinmarket regarding interest in a technical blog. I want to do a bitcoin blog because I think bitcoin has a lot of potential to become the future currency of the world. More importantly, I want to bring in my technical knowledge of 6 years from the stock/futures market into bitcoin. There seem to be a lack of technical analysis and statistics in bitcoin, but a whole lot of speculation. Hopefully this blog will help you learn and understand speculation. This blog will remain free because I believe that information should be free and transparent.
5-26-2014 Technical Analysis on Bitcoin
Bitcoin has gained both momentum and strength since last week. I believe it will continue to go up in the coming days. But don't just believe what I say. I've attached a chart with those projections. If you do not understand a concept, go to the bottom of this post. I created a small section for those that are not familiar.
The measured move target of this run up is 610 dollars/btc. This is a very likely target because of the heavy buying with above average daily trading volume lately. In addition, There are a lot of overhead resistance at 600-610 dollars. There is a confluence at this target price and hence I believe confidently that it will get there. Statistically, there is a 64% chance that a measured move will hit its target. Average rise is 23%. Warning, this is based on stock price analysis. I am giving you a few reference because currency and stock behaves the same in many ways.
My third target is 710, we clearly see that there is lots of selling in the past at this level. If bitcoin continues its current trajectory, this will be the next target because there is no real selling between 600 and 700 dollars.
That is it for today. In the next post, I will go over a few concepts. Let me know which one you want me to cover. Vote with your voice. 1. Correlation between bitcoin and commodities like gold and silver. How those prices affect bitcoins. 2. What happens when bitcoin rises for three days straight. What will happen on the fourth day? (like last week)
Support and Resistance:
Horizontal lines in my chart are called support and resistance. Support is a price level at which demand is thought to be strong in the short term to prevent price from declining further. In bitcoin's case, you can clearly see that bitcoin has support at 530 dollars. It has bounced off at this price multiple times before. IE, the aggressive buying at this price is higher than the selling.
Resistance is a price level at which selling is thought to be strong enough to prevent price from rising further in the short term. At 710 dollars, we see that bitcoin has hit this price multiple times and turned. We can say that the selling is more aggressive than the buying, another turning point. By analyzing past resistance and support, we know where supply and demand are at. Therefore, we can predict or speculate where bitcoin prices might go and finally making a trade.
Measured move is based on the idea of momentum and that stock will continue to have strength. Take a look at the bitcoin chart, we clearly see that bitcoin rallied from 450 to 530. It consolidated for two days before continuing to rise. If momentum is the same, (how do you tell?) the next rally will have similar price rise. This is why I drew two rectangles of the same height. A measured move is continuation pattern during a bullish move.