From the wall observer thread:


Good decision, in my opinion.

Bot traders will complain perhaps, but for the majority it's an improvement, and shows that Bitstamp listens to customer complaints (about unfair fees, in this instance).

I usually suck at spotting divergences, so I better ask...





bullish divergence?

[ ] yes

[ ] no

Let's have a quick look at daily Ichimoku clouds, shall we?

I'm still learning the basics of it, and a part of me remains skeptic about the premises of it, mainly: the 26 day "projection" of the cloud, which seems to be based on the assumption? observation? that all markets react with a ~26 day delay... it's an interesting idea, but the skeptic in me wants to see some data on that assumption.

Anyway, here's a pattern that seems to unfold similarly now as it did about 2 weeks ago (EDIT) sorry, 6 weeks ago, around March 24:



Price drifts into the cloud (which is a prerequisite of reversing, i.e. closing above the cloud), shortly after the conversion line sees a bearish crossover with the base line (i.e. the fast average falls below the slow one), together with a delayed upwards 'jump' of the base line, which is, if I read this indicator correctly, the delayed effect (through the slower moving average of the base line) of the rally we saw around April 15 (i.e. the one that took from 340 to 550).

Note that the last time this happened, in March, price got near the base line, but failed to break through it, spent a few days (3 to 4) in the lower part of the cloud, then decisively fell out of it. My interpretation is (I am for the moment following the "delay" assumption implicit in Ichimoku analysis) that the move *into* the cloud (which can look like a bullish breakout attempt) is triggered by a delayed market reaction to the rally from about a month ago. The next necessary step however is breaking through resistances, at first the base line, then the cloud itself. Failure to do so within a few days is seen by the market as a rejection of the attempt, and leads to a sharp drop.

Applied to the current situation, we would like to see reaching the base line at ~472 today or tomorrow. That base line will inevitable fall somewhat within the next days (because the April uptrend was followed by a correction), so within the days that follow we will either see price staying above the base line, and inside the cloud (in which case we could make the case that a reversal is really underway this time), or price will fall together with the base line like it did in March, which probably means we will see another capitulation-like event.

CMF looks good now.

Not sure, but looks to me like RSI still has some problems:

Example: daily RSI.

You use 14 periods and close price, right?

April 10. Wisdom gives 24.18, tradingview 23.6.

On a few more data points it looks like your RSI is slightly higher than it should be.

Holy crap, you are fast  :o

Thanks!

(as before, I won't forget a tip)

EDIT: Can you maybe check the implementation of CMF? It gives slightly different results than for example bitcoincharts (example: April 30. Your site 0.099, btcharts: > 0.1), but more importantly, it seems to graph the values wrong at times (example: April 30 value is 0.009, but graphed higher than the May 1 value of 0.25)

Congratulations, mah! Finally reeled a sucker in, after all those fruitless posts, month after month after month.

The Wall Observers are proud of you!

You might be a pigheaded statist neo-luddite when it comes to our little crypto experiment, but I like your sense of humor.

Don't know yet. Are you planning to? Presenting something, or just interested in the talks?

I'll start (cautiously) cheering at ~466, more confidently at 480 to 490, and will consider buying back when we're well above 500. Even then, it'll still be at a profit for me, so I'm in no hurry.

Volume starting to look a bit better. Let's see where this will take us.

Resistance at ~443, not really surprising.



Needs to pick up steam soon, if we want to have a shot at an actual breakout.

Agreed. I mentioned it because I don't mind getting excited about some early victories (like breaking through a few earlier resistances). I do however prefer not to get too excited about a dead sparrow, as the Dutch say.

It looks to me like you take the tenets of EW theory (or some variant of it) quite for granted. Under that view, we have only one such historic supercycle capitulation to work with, June to November 2011. Textbook case of what you have in mind, I guess,in price and volume.



Looking at the current cycle, I see little chance it'll play out that clearly again this time, unless we're in for another 4 or so months of downtrend, which we'd need to get an equally convincing volume pattern as in 2011 (yeah, I'm eyeballing this).



That scenario however I consider unlikely, because already now the market starts feeling more nervous to enter the next phase. I am pretty sure the little spike we're seeing now is just the last gasp before we're about to go down again, so I'm not making a case for a sudden reversal here, but I also doubt we will see a pattern like 2011 again where the capitulation will express itself that clearly again over such a long time.

EDIT: Fun fact. During the 2011 bear market, you would have been able to ride out the post ATH slide with almost pinpoint accuracy based on a simple 1 month EMA, from 15 to 2.50. Aaah, simpler times....

I don't think that's a very practical distinction.

Intrinsically there is perhaps a difference between (news driven) crashes and (sentiment driven) capitulations, but they regularly co-occur and it becomes difficult if not impossible to precisely tell them apart. Even if you can tell them apart (by volume and how they stretch out over time), I am skeptical about claims what a "real" capitulation has to look like:

In late June/early July last year, there seemed to be consent among the technical traders that we "didn't properly capitulate yet". I remember several (detailed and thoughtful) threads that made this point, for example by slipperyslope and bear-in-a-suit-avatar guy.

Didn't really matter... early July came and the market decided what we had was good enough for a capitulation, and moved on. First into an upwards sloping consolidation (July to October), then (after the Silk Road flash crash that revealed the real buying pressure), into the ATH rally (October to December). Of course, China had something to do with it as well.

In my opinion, we capitulated just fine on April 11. Or at least, "good enough". The problem is just that, afterwards, buying pressure still turned out to be insufficient to support the price level resulting from that capitulation. That's why, after the initial upwards swing, a period of sideways trading follows, soon complemented by a few mini pump&dumps, and then the next capitulation is on the horizon.

I expect this cycle will continue until we are able to really defend any price level. Note that each capitulation cycle works towards that in two ways: 1) the resultant price level is lower, so whatever fiat is available is able to soak up more coins, and 2) it gives the market more time to recover, both in the sense that a majority starts feeling that we're read to go up again, but also by giving more time for new participants to enter the market, bringing in new fiat that accumulates and waits for a chance to enter.

YES! ABSOLUTELY! WE ARE!

We broke the holy 440! That's it, back on track to 300,000 per coin!


(Of course not. I'd at least wait with getting excited until we make it to around 480 and close above, that'd be a remarkable feat in this market situation.)

Guys?

Did I miss the train?

Fuck. I knew it.


Alright, that's it, I'm out for good. No point buying in anymore now that I missed it :/

Hey, BitcoinWisdom

Any chance you could add one or two more of the most common indicators? Chaikin Money Flow (a very useful volume based indicator) and RSI (as opposed to Stochastic RSI that you already have, but which can be a bit too "nervous" sometimes).

I know you try to keep your site fast and efficient, but those two seem worthy additions if you ever chose to add something to the set of indicators.

You're starting on a strangely simplistic premise, that "the Chinese" bought up a number of coins, have been hoarding them, and are now (slowly? not so slowly?) selling them off one by one, depressing the price.

It is probably more instructive to think of this in terms of supply/demand, which practically seems to mean: in terms of volume. (EDIT: /actual/ volume, not inflated one, hence the entire discussion in here how much we can trust volume on the Chinese exchanges). The relation between volume and supported price is complex, and I make no claim to fully understand it, but in a thread of my own I did some back-of-the-napkin calculations looking at volume on Western exchanges over the last months, arriving at a price target of 250 to 350. As in: if China drops out entirely, the current volume on Bitstamp+Btc-e+Bitfinex supports a price between 250-350, under the assumption that USD volume is a rough predictor of USD/BTC together with the conservative (and probably wrong) estimate that the lowest supported price per coin is related to an average of USD volume of the recent period by a constant.

Nice high level summary of the situation.

I personally see two likely continuations from here: continued bear market in the form of another sharp price drop (the capitulation event you describe), or continued bear market-slash-consolidation in the form of range trading, bounded by 400 and 480-500 (maybe with a slight downward bias).

The other possibility, an immediate continuation of a stable uptrend I consider comparably unlikely. Volume is lacking, and right now both buyers and sellers seem exhausted, which historically (in btc trading) tends to resolve in a continuation along the previously dominant trend, i.e. the downtrend picks up speed again.

Another interesting question is what will happen /after/ the reversal. To compare it to the previous year: post ATH, 2013 can be split up in 3 large trends: the downtrend (April to July 2013), the upwards biased consolidation (July to October), and the run-up to a new ATH (October to December). It will be interesting to see if the first stable uptrend after the reversal already takes us past the the previous ATH, or, if not, how many trend cycles it will take to get there.

Obviously. Because price and demand driving the price are in a linear relation, huh?^*

It's a good thing you're a computer scientist, and not an economist, Jorge :D


^{* At least that's how I understood your argument about 10x price increase and "total demand".}