Anyone for tea?

Its time for an update to my blog, in what will probably be first of two posts, (I also have some ideas about gold I want to put out there). In any case an update feels a bit overdue as quite a lot has happened since my last post.

So, staying on topic of bitcoin for now. Last post I felt confident we’d soon break $300, which we did however now we are somewhat below $300 again. How did that happen?

What else? Well there was a massive crash down to $150 on BTC-E !!!! This is not the first time it has happened, there was also a flash crash on the same exchange, back in February 2014

Heres a look at those two flash crashes on btc-e

In a way this crash has spooked me a little bit, the first one fell a lot further but stopped at a line which I use as the absolute floor but this latest one although smaller drop went under that floor. However maybe I shouldn’t read ‘too’ much into it ..

Whats going on in btc-e, why these crashes? From various different theories I’ve read it seems likely its enabled by the low volume on the exchange. Some traders have suddenly found sell orders triggered (by some large dump?), causing a cascade of selling and these people to lose out big time and in the mad rush unable to buy back in quick enough. Whatever happened it does seem very shady and makes one wonder if some insider knowledge is involved in this moves. Anyway the fact is someone has gained some very cheap bitcoins at the expense of others who probably never dreamed those sell orders being triggered. If there are other plausible reasons this happened I’d be interested in the discussion.

In the aftermath of this flash crash I have decided to revert back to using Bitstamp for my charting for now. I previously used Bitstamp and abandoned it when that exchange seemed to have its own difficulties. It makes me ponder which exchange is best as a proxy for bitcoin in general? Maybe I should be looking at one of the big chinese exchanges? For now, and for better or worse I’ve settled back on Bitstamp.

This also give the opportunity to remove all my trendlines and start with fresh eyes on a blank slate, not that theres much there so far.

Anyway there is this nice cup shape with whats looks like a handle forming.

If that bullish pattern does play out we might be looking at some price near the top of the channel I’ve drawn in. But maybe not before bitcoin drops further to complete the handle…

In reference to my last post I don’t really think there is any particular significance to $300 except that in US dollars it happens to be a nice round number. Being back below $300 looks to me like a needed correction after some fairly large bullish moves. Hopefully before long the bullish trend continues.

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22 thoughts on “Anyone for tea?

  1. Bitfinex, or just not okcoin. I think the bull returns with the block halving, also the btc price has had an inverse relationship with the chinese stock matket and central bank price cuts. Look for moves up on chinese bank news or chinese market chrashes.

  2. I’m reading a book of a Khalid El Bouzidi (title : Trader l’ichimoku, la nouvelle approche) and I don’t know if he’s the inventor of the theory called in french “cassure de la tête de chinkou” but he described this very sharply. What bitcoin price did yesterday appears to be a strong bullish signal.

    https://www.tradingview.com/x/J7BiuRPp/

    I gonna update it when needed if you will.

    1. Artiti, not sure how we’d work it but I’d be happy to make some of your ideas be guest posts if you feel like it. I’ve said it before but I really appreciate you sharing your ideas here.

  3. Is it possible to infer support and resistance lines from this?

    For example, at the moment looks to be strong resistance at 300 with the vertical line at 300 (lots of people looking to sell there) while there isn’t strong support until the 270-278 range where there is a cascade of buyers at those ranges.

    1. I do look at those kind of pictures of bids versus from time to time but I treat it as a picture that can change quite quickly when the market is moving. Although that one seems to be staying quite stable… What time period is it showing? In general I’m a bit wary of making too many conclusions from that info based on that alone

      1. From the bitcoin speculation forum, someone posts it on there. It is a 1hr timespan. This is the last hour.

        This looks very bullish at the moment, lots of buyers looking to get in. If we can get past 300 looks like price can spike upwards.

    2. Where do you find those charts by the way? they look really nice

      Did you see this one, from quite a while back, it shows the period leading up to April 2013 bubble peak.

  4. I was on a vacation when the latest flash crash occurred, but since it’s only apparent on btc-e, there’s probably nothing to worry about… for now? Still, as you said it looks very suspicious! What keeps me positive is the fact that on a W1 chart we have broken through the contracting bollinger bands which indicates for bigger bullish moves ahead and we are once again making higher highs on 1H. They’re small, but they’re there.

  5. According to this, we should see a bounce here. As of a few days ago, there was going to be strong resistance at 300 and that held. We have now fallen from 297-298 all the way down to the 270-278 support range. As long as those buyers remain there, price shouldn’t fall below 278.

    1. Well I don’t know about that, I suspect many buyers will move their bids lower if they think they can get cheaper bitcoin.

      From my point of view we are still forming a handle on the cup and handle formation. I can see price falling further yet, maybe towards $250 .. before next bull run.

      1. 3-d layout gives the impression that bid wave is going to devastate ask land as a tsunami would do it.
        I don’t pay too much attention on that outlook. Order book changes so fast. Plus you only see market makers “footprints”. Market takers make price moving and you can’t see it by this way.

  6. The price action with the decreasing volume over the last 3 weeks since the 315 top seems to be forming a bullish pennant which is also potentially forming the handle of the cup, and price is primed to break out once we finish the wedge, agree?

      1. Thanks for your analysis James! You’re TA looks very similar to my own especially at the start of this blog 🙂 Same as you I think it will break up, hadn’t spotted that wedge pattern.

        I’m also currently intrigued by the way litecoins’ moves seem to pull bitcoin around which is opposite of normal.

      2. Yes, I had definitely leveraged your cup and handle pattern and just added the triangle wedge, in a way that wouldn’t violate the cup and handle pattern by saying the wedge and handle are one and the same. I am hoping with this pattern we don’t have to pull back to 250 and that 278 will be it.

      3. In actual fact I was meaning the way I also used to draw lines on charts back when afbitcoins blog first started. I was using a screen capture of bitcoin charts and an arts package (gimp) to draw my lines, which looks similar to the way you’ve done yours if I’m not mistaken.

        Anyway on topic of cup and handle I’m starting to think we won’t drop as far as I thought, your wedge idea looks good. Heres hoping for a break up soon!

      4. Since I’m new to this stuff, how does a breakout usually occur? Does there need to be a trigger (i.e. some type of news) or can it happen spontaneously? For the breakout to be legit, supposedly we need very high buy volume. All of a sudden people need to start to decide buying and raise their bids??

      5. I’m still pretty new to all this myself really, but the way I think of it, although news events may have some influence it normally just happens because the forces in the market are already there. For a bullish pattern like this perhaps many traders may be waiting to confirm it breaks up before buying.

        If it does break downwards from this wedge I don’t think that is the end of the pattern though, I’d still say theres a chance it may fall further in this handle, possibly not all the way down to $250 but maybe somewhere around $270.

      1. Theres that plus Mark Karlples arrest maybe ..

        I’m still hoping handle will validate and next bull run pick up steam but I could be wrong, won’t be first time.

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