Bitcoin Price Analysis 6–8–2018

It’s been a while since I’ve gotten the opportunity to dig into a Bitcoin price analysis, so I’m just going to dive right in there:

Introduction

Looks like we’re off to a solid start if you look at the daily chart for Bitcoin.

Since I Have This Guppy Overlay On, I Might as Well Go Ahead and Cover This

This is the Guppy indicator here.

I’m still somewhat bullish on $BTC hitting this level (in the short-term). It’s successfully already re-tested the lower support after a breakout, which is typically of trend breaks (that downtrend line that we’ve seen since May 5th, 2018).

Source: https://www.dukascopy.com/fxcomm/fx-article-contest/?Trading-The-Retest=&action=read&id=1128&language=en

This does not always happen, but typically when the price breaks some sort of long-hanging resistance point (and support point), it will often “retest” that point before continuing in its general direction north or south.

Let me show you where this has happened twice with Bitcoin.

So, we know that the price has broken the northside of that downtrend resistance from May 5th to this very point right now. Then it went to re-test this downtrend resistance a bit later.

Afterward, the price then broke the $7.5k price mark and then re-tested $7.5k before moving forward.

Based on the volume though, however, I could see Bitcoin potentially trading within a range for the near future.

There’s definitely a latent potential for the price to trade within that range between that $7.5k to $7.7k range with $7.7k acting as the resistance and the $7.5k acting as the support, of course.

Now, I’m going to go back to the 1D chart.

This is a look at $BTC on the 1D price chart w the Gann square applied to it as well as all of the resistance/support points that I have drawn over time. Just to give you more of an ‘aerial’ perspective on what’s going on.

As you can see from the Gann Box:

There are a number of substantial resistance/support points on BTC that can be identified with this tool.

Here’s the Ichimoku Cloud

Bollinger’s Bands

Here’s a look at the Bollinger’s Bands on Bitcoin at this very moment.

Just For Good Measure Here Are Some Guidelines For Bollinger’s Bands

1. The Bollinger’s Bands typically serve as moving supports/resistances.

2. They were created by a guy named Bollingers’

3. That guy is actually on Twitter AND is he is very much aware of Bitcoin as well (he’s commented on it before). Link = https://twitter.com/bbands?lang=en (His name is John Bollinger — nice guy, I think)

Another thing that the Bollinger’s Bands is useful for is telling us whether a specific coin is going through either consolidation or expansion (larger price action — up or down)

Now, that all of that is established — Check this out.

An Example of ‘Constriction’ in Bollinger’s Bands:

As you can see in the example above — identifying the constriction of the Bollinger’s Bands is important in helping us identify what portion of the price cycle that we’re in accordance with Wyckoff’s theory (source for Wyckoff chart: http://www.wyckoffanalytics.com/wyckoff-method/ )

Here’s an Example of Expansion in the Bollinger’s Bands:

As noted in the picture above, the expansion of the Bollinger’s Bands almost always precipitate a greater overall move in the price action itself.

Another facet of the Bollinger’s Bands (BB), that is worth noting is that the upper and lower bands serve as ‘overbought’ and ‘oversold’ indicators.

Thus, whenever you see price bars outside of the bands themselves, we can confidently say that we are witnessing an ‘extreme’ in price action and that it is more than likely that the price will correction in the very short-term, immediate future. How soon the price corrects depends on the exuberance (heavy pump) or despair (massive sell-off/capitulation candle) of the market itself as well as the time frame used. But, it typically is never more than just a few (5 or less) bars away. “

If you’re witnessing such an extreme in price for more than 5 periods (bars) in a row, then there is truly a rare phenomenon going on.

I say this only because the Bollinger’s Bands, by default on TradingView, is programmed to look back reflexively at price and adjust according to the last 20 bars while factoring in an adjustment of 2 standard deviations (remember: bell curve) based on said values.

Here’s the Raw Coded Data Below:

Also, here are a few examples of this phenomenon occurring as well:

Also, just to double back — remember when I was mentioning the width of the Bollinger’s Bands and the ‘expansion’ and ‘constriction’ and all that?

Well, sometimes it’s hard to just ‘eyeball’ this out on a chart by simply looking at the Bollinger’s.

Fortunately, there is a concrete metric on TradingView that is designed to help traders quantify the width of the bands themselves, so that minute increases/decreases in the width of the two bands can be detected with greater ease.

Bollinger Bands Width

This indicator is called the ‘Bollinger Bands Width’ on TradingView. Here is a picture below:

The picture above sort of speaks for itself and lends itself as a cogent example of a proper means of conducting an analysis on this indicator.

Bollinger’s Bands %B

Another indicator that is predicated upon the BB that I find to be extremely useful = Bollinger’s Bands %B.

Simply put, below is an explanation of how this indicator works:

Source: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:bollinger_band_perce

So, remember how we were discussing that a price that floats on the outside of the Bollinger’s (top or bottom bands) essentially is another overbought/oversold indicator?

Well, the Bollinger’s Bands %B is way of directly confirming this.

Thus, this can not only help us with identifying the price movement of a particular coin (Bitcoin in this case) — but it can also aid in the implementation of trading strategy as well.

Check This Out:

Here’s an example of how the Bollinger’s Bands %B works.

Based on the reading that we saw above, there is definitely room for the price movement to continue to expand to the nether region of the Bollinger’s Bands on Bitcoin at this very moment in time.

I’m sure that we could smooth these bands if we really wanted to and play with them in a variety of ways in order to get some unique results, but we’ll get to that on a later idea.

Some Potential Ideas:

1.) Created a pine script that adjusts the top and lower band to track the last 20 periods via exponential moving average, Hulls Moving Average, or Difference of Two Squares.

2.) Adjust the period lookback of the Bollinger’s Bands.

3.) Adjust the standard deviation of the Bollinger’s Bands via Pine Script so that the period of lookback & standard deviation automatically adjusts algorithmically (this can be coded) based on the volatility of the underlying project for the previous 100 periods with a fixed upper/lower bounded limit of +/- 10 candle lookback (i.e., at max there would be a 30 candle lookback & at its least, a 10 period lookback).

For the standard deviation, this could oscillate between 3 standard deviations and 1 standard deviation. Someone with a thorough understanding of math would have to be able to code such a script. I’ll probably create it myself with a math nerd and then call it the ‘Adjustable Med Bands’

4.) Perhaps an oscillating function similar to the %K/%D on the Stochastic on the Bollinger Bands %B.

5.) A potential incorporation/integration of both the Bollinger Bands %B and the Bollinger Bands Width.

Exponential Moving Average Indicators

Per usual, I always refer to my EMA indicators whenever I want to get a better sense of the tracking of the price data over the last few periods.

I typically use the EMA-50+EMA-200, although in this analysis, I’m going to observe the following as well:

· EMA-12

· EMA-26

· EMA-50

· EMA-100

· EMA-200

Specifically, I’m going to pair the:

· EMA-12 & EMA-26

· EMA-26 & EMA-50

· EMA-50 & EMA-100

· EMA-100 & EMA-200

Source: https://www.investopedia.com/terms/e/ema.asp
In the picture above, you can see both the EMA-50 and EMA-200 values.

The price that the EMA-50 is sitting currently (at the time of writing) = $8.1k

The price that the EMA-200 is sitting currently (at the time of writing) = $8.5k

As noted in previous analyses, the death cross is still in full effect at the moment for $BTC (EMA-200>EMA-50)

Above is the EMA-26 & the EMA-12.

As you can see, the price has crossed above the EMA-12, which is definitely a bullish sign. However, the EMA-26 is right above, hanging at around $7.8k sats.

It remains to be seen how much of a support the EMA-12 proves to be & how much of a resistance that the EMA-26 will be, but this is something of note.

It appears that Bitcoin will remain fixed around the threshold of $7.6k-7.7k for the next few hours at least (it seems).

Nothing remarkable about the rest of the indicators so I’ll move on.

However, if you’re looking for more information about Exponential Moving Averages — definitely check out this article that I wrote here: https://medium.com/cryptomedication/why-ema-indicators-are-fantastic-support-resistance-points-6e234b484826

Fibonacci Plus the Gann Fixed

This is the Gann Fixed Square (I believe) on TradingView — a very reliable resistance indicator, which pretty much plots any and all of the resistance/support points that one could hope to conjure with Fib charts.

If you’re confused on what I mean by ‘Fib’, and want to get a better overview, check out this guide that I wrote on it below:

View story at Medium.com

Additional Indicators

RSI(14) = pink line

+ I smoothed over the RSI(14) as well, which is the blue line. The blue line = EMA(9)

My analysis of this is that the RSI is still on its way up overall. Yes, I see that curve down a bit lower at the end, but until that trend entirely changes, I don’t think that there is any cause for major concern here at this point.

The smoothed over average shows us a clean and smooth trend of the price increasing.

Thus, I feel that $BTC is safe at this very moment. Although, it is nudging against that resistance pretty heavily. But if the RSI continues to grow, then I assume that the price resistance ($7.7k) will be broken sooner or later.

Moving Average Convergence Divergence

As you can see, the MACD cross did occur here on the daily just a few periods ago.

Normally you don’t see the MACD overlayed on a chart in this manner. However, I usually overlay it directly on a chart, so that its progress can be obviously visible in relationship to the price.

Just understand that the values that you see on the righthand of the chart do not correlate to any real values for the MACD and this chart is not necessarily to ‘scale’ (i.e., if you zoom in & out you will notice that the MACD indicator will adjust itself because it is not ‘in sync’ with the actual chart itself because it is not an overlay indicator and thus, its values are not tied into Bitcoin’s real-world, livetime price data the same way that the EMA is).

From what I’m seeing, the trend just got signaled by the MACD.

I said this before on one of the older timelines (I think) that one should expect the trend to continue until the MACD says that the trend will not continue.

We know that the MACD has spoken when the MACD line (blue line) changes direction.

Check out all of the various confirmations here.

Disclaimer for this article: This is not investment advice and I do not own $BTC. No one/entity/company/corporation paid me crypto/dollars/assets/favors or any other liquifiable asset/currency to write this article and I am neither profiting directly or indirectly from its curation. This article was not written under duress/pressure/threat/extortion or any other unfavorable condition either. I am invested in a direct competitor at the moment, however, which is Bitcoin Cash.

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