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One big candle on high volume pierced through the entire cloud and into bullish territory. As a rule, a piercing of the cloud is followed by some muddling around in the cloud testing support and resistance.

The conviction with which this one candle burst through the Ichimoku cloud changed the trend in one trading session. See chart below:

https://i.imgur.com/Zb8ukPS.png

Other confirmations of the new trend have also occurred. Cloud Span A has crossed over Cloud Span B. This means the new cloud forming is bullish and should provide support as price moves higher.

As the old saying goes, old resistance now becomes support. Another buy signal was triggered when the Standard Line crossed over the Turning Line. When this happened, the Standard Line actually pierced into the cloud because of how powerful the move was. This is another bullish sign.

The final sign is volume. Volume has picked up significantly on an up day, which has not been seen this high in quite some. Volume generally precedes price. So a pick up in upside volume should be seen as bullish as well.

https://i.imgur.com/d1FvBFe.jpg

Conclusion

While a pullback is possible, the trend is now bullish.

The cloud should provide support and buying on pullbacks is probably what one should be doing. If price were to pierce back into the cloud, it would remain bullish, as the direction from which the price goes into the cloud should be used as your benchmark.

However, going into a cloud is always a warning signal of a trend change and at that point caution should be used until the direction is resolved.

Written by George Samman, former Wall Street Portfolio Manager and Co-Founder and COO of BTC.sx (https://btc.sx/)

thx & welcome

 :)

What is being used to determine where that "cloud" is?

Former Wall Street Portfolio Manager

Yea, no... looks like a down market that is too dangerous to short well because of the order book asymmetry.

We had a big pump because of semi-bogus news about a hedge fund on the OKCoin platform (technically true, but misleading), then a huge pull back, then a bounce back to the low-400s where the price belonged... and now the start of a stair pattern in the short-resolution charts.

I call bulls---. Might go up, but you don't know.

Good question.  It is a little complicated.

There are 5 components to the cloud.  The first one is Tenkan-Sen (i.e. Conversion Line). This line is constructed like a moving average.  It looks back 9 days, but unlike a moving average you don’t average each day in the period.

You calculate the overall midpoint between the highest daily high and the lowest daily low in the period.  This gives you the midpoint of the trading range across the last 9 days. Formula: (9 day high + 9 day low/2)).

The second line is Kijun-Sen (aka Base Line).  This is calculated in the same way as the Conversion Line but has a look back period of 26 days.  This was the original amount of Japanese trading days in 1 month.  Formula: (26 day high +26 day low/2)). The Conversion Line is shorter than the Base Line so it turns more times than the Standard Line - these crossovers can be used much in the same as MA crossovers.

Senkou Span A (aka Leading Span A) is the midpoint between the Conversion Line and the Base Line. This forms one of the cloud boundaries. It is referred to as Leading because it’s plotted 26 days into the future and forms the “faster” cloud boundary.  (Conversion Line + Base Line/2)).

Senkou Span B (aka Leading Span B) is the midpoint between the 52 day high and the 52 day low in price. Formula: (52 day high + 52 day low/2)). This is the equivalent of 2 trading months. This is also plotted 26 days into the future and forms the “slower” cloud boundary.  

Please note that the spans are similar to 17 day (the midpoint of 9 and 26) and 52 day averages shifted forward.  The Cloud is formed from a shorter term and a longer term average snaking around each other shifted ahead of price.

The final component is the Chikou Span (aka Lagging Span). This is simply the price close plotted 26 days in the past. Below is an example of how this looks:

https://i.imgur.com/S2nWPVN.png

Yes former. Unfortunately there are not enough hours in a day for someone to both work on Wall Street and be a COO of a startup

Can you predict exactly when you think it will go up, and by how much?

No that is impossible. This analysis simply suggests that we are now at the start of a bull run.

But will you hodl?

Of course!

https://ip.bitcointalk.org/?u=http%3A%2F%2Fi.imgur.com%2F8IXy2Ap.jpg&t=546&c=6wxuVbItObiq3g

On a serious note, do you think it'll pass $420 anytime soon? Bought a little too high like a nub

 :D  Try buying in at over $800 and not selling the whole way down. That's how we pros hodl.

We do not like to give out investment advice and encourage our traders to think for themselves. However, if this bull trend sticks, $420 should be reached soon.

Painstakingly professional. I like it.

Will check you guys out soon. Take care and good luck with your business.

another good sign is the weekly macd

Is that bullish right now?

Nope! It's hooking up, sure, but until it crosses, it's not exactly Bullish. Perhaps more neutral than anything.

thats right,  looks like it is about to crossover in the coming weeks giving a confirmation to a bull run

remember just because it becomes bullish does not mean high volume or large price increases, just little chance of going down

when the spacecraft crashed, it's very painful  ::)

Thanks! Good luck hodling :)

Moon time yayayayaya!

UPDATE:
Right now is a time to stay bullish but be vigilant. The price is back in the cloud which is warning of a change of trend.
Price has held support and stayed in the cloud. Indicators like RSI point to staying bullish. Cloud Span A has crossed Cloud Span B in the cloud ahead which is a bullish sign as well.

The Standard Line(BLUE) has crossed through the cloud to the upside which should resolve price as bullish. Price is in a congestion zone and using caution right now is probably best as we wait to see which way price resolves itself.

https://i.imgur.com/TrjoIu8.png

Thanks,BTC.sx
please Continue, Ichimoko Cloud is very interesting

The price of bitcoin (and bitcoin itself for that matter) has always been in the "cloud" my friend!!!
It can't exist anywhere else!!!  :D :D :D
 ;)

Whether the original poster is right or wrong, this was a typical loot and pillage Wall Street view of markets, or how to try and make a quick X percent and bail out to fiat as fast as possible.  I tried to do the opposite in the following post and address Bitcoin's possible store of value within the new few years, as store of value is really the most important aspect concerning Bitcoin's future:

http://bitcointalk.org/index.php?topic=837260

Having said that, I will say the common man's complaint of Bitcoin being a "Ponzi scheme" does have some merit, if you replace the word Ponzi with pyramid, but any centrally controlled system is the same difference.  It's just a pyramid with a house beneficiary vs a pyramid without one.

https://i.imgur.com/M0xRCtF.png

Price has penetrated into the cloud and is now stuck in it.

It has tested support and held thus far. But it is a time to be cautious and the evidence is leaning bearish. If we break through support in the 350-357 zone. Time to short it. Other indicators need to improve or it looks like a false breakout occurred. Now is a time to be vigilant.

I am shorting already. And will continue to do so until we hit a low of $150 in December  8)

How low could the price sink if we break through support in the 350-357 zone?

The shorters will never learn!

And hodlers never got it from the start

So now everyone is agree we're going down.

According to the Rule of Maximum Pain : everyone is always wrong.

What is maximum pain right now?

option A. Loooooong serie of unpredictable jumps and drops until nobody knows what's going on and lose all his BTC with bad trades

option B. Big rise, too fast to get into (maybe not now... only when everyone will be sure we gonna fall in the abyss)
bonus : when everyone is aboard, we realize it's a dead cat bounce and the truth is we are going down again

The Rule of Maximum Pain sounds similar to Murphy's Law.

Whatever can go wrong will go wrong.

Fixed: Whatever can go happen will happen.

Same result but there is a difference : Murphy's law is based on false impressions.

Rule of Maximum Pain has a real base : 80% of the traders are doing bad trades and 20% take the money. So what 80% of us find likely will be always the bad choice.

the most logical thought yet 80% of people are wrong in their prediction

 if they yell sell then buy if they yell buy then sell

if it is quiet hodl

Update? It would be nice to see if we're moving above the cloud

Depends on where we close tonight, but we're at the upper end of it at the moment.


https://i.imgur.com/8wDd63d.png

(colored line is close price)


TBH, I'm never quite sure how to read Ichimoku, and whether I trust it or not. For example, is the recent retest of the cloud after we closed above a bearish signal (probably yes), or is the fact that we found support inside the cloud during the retest a bullish signal (probably yes as well). I guess I just can't put the pieces together yet in the case of Ichimoku.

i certainly wouldn't trust an indicator if i just clicked the show/hide button with no thought into the input parameters and how they shape the outcome. it just ain't that easy.

The key word of the last week has been whipsaw. This term is applied in trading circles (http://www.investopedia.com/terms/w/whipsaw.asp) when the price head’s in one direction, and then is quickly followed by a movement in the opposite direction.

The price of Bitcoin has entered a period of high volatility and is whipsawing all over the place. A few simple words here: traders beware. It is time to be vigilant and wait for the price to resolve it itself one way or the other and form a trend before putting money to work.

The chart below shows how hard it has been to predict the price movement as we have moved from bearish to bullish (https://medium.com/@BTCsx/how-to-ride-the-bitcoin-bull-94482676ce6a) back to bearish and are now back in the cloud.

Right now price is bumping up against the top of resistance and a break through would be a bullish signal. The Lagging Line, which is the slowest of the Lines, has yet to pierce into the cloud and confirm a bullish move; if it does, that should mean we are seeing a bullish transition forming.

https://i.imgur.com/sWl1gKl.png

Based on recent trading it would be prudent to look at other indicators to confirm the move. The chart below shows some indicators we will use to get confirmations in the event that price breaks resistance.

The RSI is in bullish zone despite the recent downturn and is has plenty of room to run if the price confirms to the upside. Money Flow has been very bullish and continues to be so, as money has continued to come into Bitcoin despite all the volatility in price.

MACD (http://www.investopedia.com/terms/m/macd.asp) is close to crossing over, which would trigger a buy signal. What’s even more significant is that MACD is now in positive territory when making the cross over, so this is another potential bullish signal.

On Balance Volume (OBV) (http://www.investopedia.com/terms/o/onbalancevolume.asp) is trending at a low level — an upside move in price should be confirmed with a rising OBV. Using other indicators to confirm is essential when analyzing charts particularly when we are in a period of uncertainty and waiting for signals to trade.

https://i.imgur.com/TryshTp.png

Conclusion

We don’t have any definite trading signals as price has created a false breakout followed by a false breakdown. The price is now back in the cloud and rubbing against resistance. The weight of the evidence leans bullish and if price confirms, a buy signal will be triggered.

In the meantime, there is no need to rush into a trade. The price will tell us what we need to know soon enough. A price closing above the resistance level of 383.23 (we are currently at 391) would put the price back in a bullish zone and generate a buy signal. A close below 352 would be a breach of support and a sell signal.

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Thanks for the update!  I'm feeling pretty optimistic with multiple indicators are on the edge or hinting at a bullish breakout. The 3D RSI is still indicating an upward trend yet the price action is still bouncing up and down. Hopefully the price will begin to follow the RSI upswing, but we'll see!

Glad to help. Yes a bear market cannot last forever with this year's fundamentals growth.

Bitcoin has gone back to bullish with a breakout above Ichimoku clouds. MACD, RSI and money flow also providing bullish signals.

https://i.imgur.com/djp5PuP.png