In the above daily chart of the Mt. Gox Bitcoin price in USD, we’ve also got relative volume bars semi-visible in the background. Also shown are Fibonacci levels, a trendline and the MACD indicator. In the first section, I’ll cover these details and why I consider them important. In the next section, I’ll formulate a trading plan.
1) The Chart of the Past
The colour-coded areas correspond to the Fibonacci retracement levels. The levels are traced from the “Silk Road seizure” low of $109.50 in early October, up to the $1250 highs in late November and early December. A quick refresher on Fib levels:
the red zone at the top represents a Bitcoin price range between the high and 23.6% lower,
the next level down in yellow is the continuation of the range down to a 38.2% drop (or “retracement,” in trading terms) from the uptrend highs,
the green covers a continuation down to 50% (not a true Fibonacci sequence value, but frequently included for its utility),
the weird greenish-blue colour covers a continuation down to 61.8%,
the blue covers a continuation down to 76.4%. and finally,
the grey area shows the Bitcoin price range back down to the 100% which would represent a full retracement.
Unless the Bitcoin price falls into the deadly mists of the grey zone, it remains valid to consider price as being in a long-term uptrend. Within this long-term uptrend, we’re currently experiencing a medium-term downtrend / retracement, as represented on the chart by the yellow line. I would consider a break to the upside of this trendline on strong volume to be a partial buy signal.
Next we come to the MACD (Moving Average Convergence / Divergence) indicator shown in the lower block. As the name suggests, this indicator plots two moving averages against each other. The values used in my chart – and the default values on BitcoinWisdom, where the indicator is also available – are for a 9 day exponential moving average (9D EMA) signal line and a 26D EMA minus a 12D EMA line. The pink histogram displays the difference between these indicators – shortening bars indicate convergence and lengthening bars divergence.
Read the full analysis here:
http://www.cryptocoinsnews.com/2013/12/21/key-bitcoin-price-levels-week-52-22-28-dec/
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Hurtin my feelings mate..
