this is how all trading works it's identical to a game where there are two rooms, A and B, and players move from one, to the hallway in between, to the other. each player's reward is proportional to the number of people who enter room A after him, minus the number of people who leave room A before him, as well as the number of people who enter room B after him, minus the number of people who leave room B before him.

imagine actually playing that game. seems silly, doesn't it? that's what we're doing here, all of us!

--arepo

i figured that the recent bullish action was a "bulltrap", for what it was worth, because we did not have the necessary volume to overcome the askwalls on bitstamp, and FIGURE 1 from this week's issue still showed a little bit more of consolidation space before a breakout, but to move nearly straight down from the upper resistance straight through an important month-scale support, all within 18 or so hours!

the daily-scale CMF and MACD do both look pretty grim now. i expect more downward movement from here, possibly to as low as $400. i'm not too sure about your comparison to June 2013, though, as the "factor 3" model still suggests that the final capitulation is far off, but we'll see.

--arepo

i'd mostly agree. what is most troubling is that we broke under the $530 support, and are now consolidating in a very bearish flag pattern directly below it:


https://i.imgur.com/n5Th6u4.png

while i still don't see us retesting $400, there is little price action between these two price points to help determine what kinds of supports we can expect. i have to say this took me a little by surprise. do you think that the "china ban panic" on the forums contributed to the severity of this movement?

i'm not sure trading based on this alone is a very good idea. using it to inform trading decisions along with other inputs is probably a safer strategy. an obvious weakness is that although the average error may be single-digits, there could be individual instances where the actual error is quite large, though these are rare enough that the average error remains low. depending on the size of your margin, one such instance could easily destroy your trading profitability.

--arepo

i like this guy

OT, but it's not that easy

the egg came first if we're talking any old egg. there were plenty of egg-laying creatures long before there were ever any birds at all! if we're discussing chicken vs chicken-egg, we still run into a problem: is a chicken-egg an egg laid by a chicken, or an egg that contains a chicken? many are familiar with the evolutionary story of something not-chicken laying an egg that contains a chicken. but you seem to take for granted that a chicken egg must be laid by a chicken. the egg that contained the chicken does not count as the egg that preceded the chicken?

also, don't tell people not to use idiomatic phrases because they're not scientifically accurate that's not how language works at all.

thanks very much for the kind words! the "bias function" derivation is original, yes, and still quite rough. i'm glad you enjoy my alternative methodologies -- my academic background is primarily in physics and mathematics, and i have relied on research, insight and empiricism, and hypothesis and test, to form the foundation of my technical knowledge and interpretations. whether or not the price action follows through as projected will be the real test of that particular hypothesis

i know i have been the odd one out in maintaining a cautious bullish stance, but there are quite a few factors that are simply inconsistent with the doom and gloom that seems to be the consensus. that said, there is some data that fully supports a retest of the established supports, but it's been difficult for me to find evidence for the kind of paradigm shift necessary to bring us to lower lows -- it simply has never occurred after the kind of pattern we've been tracing out in the past four months. in the very first issue of the newsletter, the opening argument was one which compared the shape of the present pattern to that of the price behavior after the April bubble, and the proportionality is significant. this suggests, to me, that we should not expect anything out of the ordinary, and certainly not a new-paradigm bear market.

i will be continuing to collect data, and price behavior this week will hopefully tip the balance decisively in favor of a clear model for breakout direction, which will be featured in the next issue.

--arepo

i'm glad you received it well! thanks for posting your feedback.

i'd like to announce that, since we added quite a handful of new subscribers last week, i'm going to start to republish past issues of the newsletter by request. since the publication is meant not only to provide price projections and analysis, but also generally inform your trading and analytic skills, past issues may be of value to the newer subscribers. please PM me if you did not, but would like to receive any of the following issues:

AWN -- Week of 10 March
AWN -- Week of 17 March
AWN -- Week of 24 March

the backlog will also be available to all new subscribers! simply sign up for a subscription, and you will unlock access to as many past issues of Arepo's Weekly Newsletter as you have paid in advance for. currently, there are 13 issues left, with the publication set to run up to and including the week of 23 June.

--arepo

this week's issue was just sent out to the following users:

oda.krell
docile
John999
kramerc
iron77
kwest
jlin
CoinBurner
Aquatic
Blue
Ultros
Roger_Murdock
rushthatspeaks

enjoy!

edit: to my two new subscribers, i'd just like to remind you that if you have any questions or comments feel free to post them here in this thread. i want to make this service as comprehensive as possible, and i know that this issue contains some math and/or technicals that some may not be familiar with.

--arepo

i agree. this is simply not how the price function behaves. although instead of 0% i must substitute the strongest statistical negative: that scenario is almost surely not to occur

this is an obvious deflection after i pointed out that the bolded statement is not only decidedly false, but also completely absurd. i'm not sure if you were simply trying to downplay the point, but if you actually believe what you said then that alone shows a lack of understanding of the situation.

it would skyrocket the BTCUSD rate simply because the USD would rapidly lose purchasing power. but i don't think that's what you're asking.

would capital flood into BTC as a safe haven? or would the BTC price crash as well, as it is irrevocably tied to global financial health?

this has been an active debate lately. many on these forums believe that BTC is a good hedge against the global economy, but some posit that in the event of a real financial catastrophe like hyperinflation of the world's reserve currency, BTC would suffer. i am undecided.

--arepo

it seems you're missing the point a little bit so i'll attempt to clarify.

even if Overstock sales come from "old coins" and therefore are associated with large bitcoin-days-destroyed, as long as there is nonzero demand this can be a good thing for bitcoin by increasing liquidity. for instance, the fact that litecoin has a larger trading volume than bitcoin is one reason i've begun to take it seriously. most bitcoins must be traded off-exchange or not traded at all, and this kind of hoarding does many things, including hurting the general liquidity of bitcoin at the exchange. anything that gets these old coins available for sale is a good thing, as the small demand that is necessary to keep this "exchange inflation" from driving down the price results in a more equitable bitcoin distribution. this process also stress-tests the ticker price against the actually present demand (bitcoin hoarding results in hyperdeflationary events that distort the ticker price).

in other words, it's not the same people who are continuously buying BTC to use at Overstock, but because the demand is present to soak up the "Overstock-inflation", it is still a closed loop that shouldn't affect the ticker price negatively, and generally contributes positively to the health of the bitcoin economy.

this makes sense. buy below, sell above is a decent strategy if you think that the best-fit line in question is predictive of a mean value. i was merely commenting on the posts you made which seemed to suggest that it should be predictive of the actual ticker price in any significant way.

so far, we've been following scenario b from my last post. the daily-scale Chaikin Oscillator has continued to flatten. the 12-hour Chaikin Money Flow has peaked. the 12-hour red ADX line has peaked. and the daily William's Oscillator is tracing out the inverted head-and-shoulders.

however, the daily RSI has decisively dipped below the 40-line, and the daily MACD shows a definitive bearish crossover.

all things considered, bid support looks strong again, and price action since the $541 low has been bullish, with a micro-scale bullish breakout up to $570 after the initial consolidation. i still have confidence in scenario b, and i'm pleased at the accuracy and precision of the 3rd target from page 10 ($540!). predictions become more and more divorced from the data set from which they were derived as the week goes on, so to see corroborating price action to such precision on Saturday is very satisfying. anyway, as it is already Sunday i'm going to save all of the juicy details of our current situation for tomorrow

@oda.krell -- i see what you mean about our differing styles. both can be quite effective if done properly. because my techniques produce falsifiable models, i like to make a solid prediction, get into position, close the position with minimal loss in the case of a falsifying signal, or close the position at my leisure as the market follows through. although sometimes i front-run the market too much and there is some non-falsifying counter-prediction behavior that incurs a loss that i am forced to hold for uncomfortable periods of time before becoming profitable

trend-following is the opposite. you wait for a clear signal from the indicators instead of attempting to extrapolate, but the indicator data, as a rule, lags price and volume data. in this way, you run the risk of being too slow to get into position, and you are forced to determine whether or not you have missed the trend or if there remains profitable price action to be seen after already getting into position. in other words, you assume your position at a point of price instability by design, which is not something i'm comfortable with. by front-running the market, i usually can manage to assume my positions during periods of stability, and exit them as volatility and risk start to climb.

seeing price behavior in terms of trends is also a little problematic, IMHO. you talk about how downtrends are visible on many scales in the price data right now, but they are punctuated with periods of large price gains. the real "shape" of the price data in the past 4 months is an oscillation pattern, bounded by a support and resistance, not just a handful on interrelated downtrends. also, we're getting very close to the narrow part of this shape, which is precisely when price action historically diverges from these bounds, or "breaks trend". anyway, i tend not to focus on possible "trends" and when i notice a roughly linear increasing support, for instance, i call it a "moving support", as i'm sure you know from the newsletter. this pattern is more generalizeable than a trend as it also appears in indicator data.

---

also, Blue just signed on to the subscription service! thanks for supporting my work, and i hope others may see this thread and judge the quality and accuracy for themselves. PM me if you're interested in signing on before tomorrow's newsletter gets sent out!

--arepo

you make good points. your call of $550 is plausible, and corresponds to the scenario where we move down to the 3rd target from page 10 and bounce. i have compiled some charts to further explore what a more bearish turn of events will look like.

right now we're looking at a standard triangle consolidation after the last move down that could very well be a bearish flag:

---
1-hour scale


https://i.imgur.com/vmIZl7A.png

---

we have three possible scenarios from this point:

a: we break upward -- very bullish, less likely.

b: we break downward and retest the last low or make a new low no lower than the 3rd target -- neutral, most likely.

c: we break downward and promptly break under the last low, continuing past the 3rd target -- bearish, least likely.

the data does not support a, and b will look like the bounce off of the flat support in the MFI as explored in my previous post. the scenario that you're mainly concerned with is c. what would that look like?

---
4-month daily scale


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

---

the Accumulation/Distribution data is trending down. this looks worrisome. however, the Chaikin Oscillator, which generally tracks the slope of the Acc/Dis line, is flattening, which suggests a weakening of downward momentum. if this figure continues to flatten, it would support the bullish case, b. if the trend changes from the increasing negative slope approaching zero to a decreasing slope, it would suggest case c.

---
4-month 12-hour scale


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

---

the daily scale Chaikin Money Flow shows solid support throughout the entire consolidation period after the last ATH, only briefly going negative during the largest volume capitulation events. the 12-hour scale, pictured above, tells a different story, and is another solid piece of evidence for the bearish case. we definitely need to see a peak in this data to be sure of scenario b. scenario c would see a continuation of the current trend with larger and larger negative values in this data.

the ADX is also looking bearish. we need the RED directional line to form a peak and then retrace under the past high at around 25. a continued increase in this indicator also supports c.

---
4-month daily scale
annotated with projection in red


https://i.imgur.com/CkGDhd8.png

---

for scenario b, we should see some support from the 40-line on the daily RSI. this provided serious resistance during the last set of lows, and today's immature daily candle has dipped us below. however, if we can hover around this point, this strengthens the case for scenario b. a decisive break below this low suggests scenario c.

the William's Oscillator is deep in oversold territory. a reversal here would look like the inverted head&shoulders shape as annotated. moving lower than the figure marked would suggest scenario c.

--- ---

i hope i have provided an exhaustive picture of each scenario: b, the bullish one i consider more likely, and c, the bearish one you asked me to explore.

thanks for the challenge! it's always important to stay impartial in price projections and be aware of all contingencies.

--arepo

thanks for the clear response. i really appreciate the service you provide

not so sure about that. it's best to limit how your emotions affect your trading and make a plan for all possible contingencies and simply follow through. the moment you start getting concerned is the moment you sell at a market bottom, and the moment you start getting excited is the moment you buy at a top

--arepo

if this was a reference to my post, i actually intentionally left out the TA aspect besides the word "overbought". all that really means is that trader consensus is that the price is "too high", anyway.

and what you say makes sense. news influences price, but each dip and spike is not attributable to some news somewhere, as many newbies here seem to take for granted.

+1 for elegance in simplicity, and overall accuracy