Bearish Divergence

[acamus]

Anyone else notice the bearish divergence in the price of bitcoins? It's probably because the 26 day ema includes many 3 dollar type prices but the 10 day chart looks like it's going bear pretty bad soon.

http://bitcoincharts.com/charts/chart.png?width=753&m=mtgoxUSD&k=&r=10&i=&c=0&s=&e=&Prev=&Next=&v=1&cv=0&ps=0&l=0&p=0&t=S&b=B&a1=&m1=10&a2=&m2=25&x=1&i1=MACD&i2=&i3=&i4=&SubmitButton=Draw&

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[matsh]

Voicing predictions like this is just silly! If you are confident the BTC/USD rate is going down, why not just sell your BTC, sit tight and buy again when it has gone down?

[zef]

can you explain the chart please?

[acamus]

i would say just google MACD. I didn't sell, but I'm waiting to buy again for now. Of course i'm looking on a shorter trading scale. Over a 2 month chart the MACD looks very different.

[Alex Thornton]

can you explain the chart please?

The price in the top chart is declining during the period from the middle of the 27th to today the 29th. Meanwhile, in the bottom graph, the Moving Average Convergence/Divergence (MACD) is rising (the green bars are going from negative to positive over the same time period).

Normally price and the MACD move together. When they diverge and move in different directions, this indicates a reversal is imminent on whatever time period you are looking at.

The divergence is suggesting that the price of a BitCoin will fall over the next few days. (Note that if the divergences were switched, the price would be expected to rise.)

Also note that this is only one indicator and is not 100% accurate. It is just one of the tools technical analysts use.

[torbank]

Thanks for the heads up

[stic.man]

today has been pretty stable as far as spread, but yeah volume is at a minimum, probably hasn't been this low in at least a month

[S3052]

There are also some other bearish divergences on multiple time scales that I willcover in one of the next technical analyses

[acamus]

really nice work over here: http://blog.bitcoinwatch.com/2011/05/bitcoin-market-analysis-may-30th-2011-by-s3052/

 Thanks!

[S3052]

thanks for the flowers!