arepo's easy TA

[arepo]

disclaimer: I've been out of this game for a long time. This is simply an outline of how the current price pattern follows a known phenomenon called the "Bearish Pennant" (Inverse Pennant)

This is for all you newbie speculators out there! (I've seen your post count and join date )

The price function is a complex thing. It is dangerous to go with your gut unless you know your gut is very smart. Price movements are stochastic, meaning, like in quantum physics, they are impossible to predict with 100% accuracy. Don't be so sure of yourself. Never bet more than you can afford to lose. Quantify and minimize risk to the level with which you are comfortable. And I sincerely hope you didn't get burned too bad in this recent recklessness.

Fortunately, although price movements are stochastic, they do exhibit time-dependent autocorrelations. This just means that there are deterministic rules in play as well, whose influence is visible through self-similar patterns.

A basic analogy goes as follows:
Imagine betting someone a bitcoin that you could tell them the exact shape of the next snowflake to drop. This is ludicrous, and you would obviously lose, as the process of snowflake formation is so chaotic that that knowledge is profoundly beyond your grasp. It would make sense to bet that the next snowflake is hexagonal though, and you'd take the money of any fool who took that bet. Because of the physical constraints of the shape of the water molecule on the chaotic process of snowflake formation, it is possible to make some, limited predictions.

Let's see some of these self-similar patterns, then!

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HANDY GUIDE:

A is easy. The first confirmation of the downtrend occurred when the price formed a symmetrical top with $266 at its peak. Before the move up, there was a brief low-volume period around $230. The breaking of that support confirms the downtrend.

B is the triangle consolidation shape that is what is referred to as the "pennant". In my physics-based model of price, it is analogous to a Newton's Cradle that is quickly losing energy (oscillation with decreasing amplitude). The phenomenon of triangle formation is widespread (there was a brilliant one around $140 that was a bullish pennant -- broke out topside). These formations must be accompanied by decreasing volume in order to behave predictably.

C tests the critical resistance. It is the interesting 'last ditch effort' of the suppressed upwards correction. It is referred to as a "breakout" both because it breaks out of the tightening range, but also because the candle has a suddenly large volume in stark contrast to the waning volume inside the formation. This fully confirms the pattern. This candle generally reaches only as high as the highest point on the wide back-end of the triangle (in this picture it only reaches halfway), but is a nasty bulltrap* because it signals the failure of the price to overcome the resistance (white line near C) which the price was consolidating against. This is followed by the continuation of the trend, D.


*Why does this occur? Why not an immediate downside breakout into the trend continuation? The 'signal' explanation (above) is decent in terms of basic understanding, but is not complete. In my physics model, it is equivalent to momentum. In order to jump, one needs to push against the floor with a force equal and opposite. In a way, the price is 'bouncing off of a ceiling' as opposed to 'jumping', where the price pushes against the critical resistance to gain enough momentum to continue the downward motion.

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Also, for all you "hindsight is 20/20" naysayers, I had plenty of foresight. I hope this will help my somewhat tarnished TA reputation  

From SwannyMatt's Bearish Inverse Pennant Chart Formation

it's all there -- the steadily decreasing volume throughout the pennant and just now, the spike in volume and price associated with the 'pattern confirmation'. this small spike is actually a bulltrap/sell signal for the smart money. get ready. target: sub $150 on the scale of ten hours

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-arepo

if you profit from me, help keep it free!
18N9md2G1oA89kdBuiyJFrtJShuL5iDWDz
I put in a lot of effort and time to present detailed analysis for the forum's benefit,
If you learned from me, please take the time to tell me what you think it's worth.

[arepo]

Follow up:

So I can hear you all saying, "hey, you can't show self-similarity with just one example!" I just wanted not to overload the newbies. My analysis is very technical.

For all interested parties, I do have a particularly beautiful example of self-similarity. This chart was saved while we were still in the mid-$100s:

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Outlined is a mid-scale "triangle reversal" pattern in the ADX which has the same behavior as the smaller-scale inverse pennant in the OP. It shows an oscillating 'ascending triangle' pattern that close with a diverging "momentum" and "direction" line. I'd upload the updated chart but the site is currently down, so I urge you to look for yourself and see what happened! The ADX momentum line overshot, mirroring* the bulltrap (this is more than just coincidence, even though the quantities measured, price vs momentum, are much different), and then fell in step with the downward movement.

[ *The shape is similar because similar 'physical' constraints are acting on the quantities, but the nature is quite different. The blue line follows price 'momentum'. It is an oscillating formation because volatility can be modeled by a modulated sine curve, and momentum follows volatility during a trend. When price oscillates, it is as if there are "equal and opposite forces" acting on it, like the Newton's Cradle, but when volatility oscillates, its amplitude changes over time in a self similar way, as in composition of sine functions.

That is, if the momentum line of the ADX were averaged and smoothed, it would behave like a stretched-out sine function itself, with near-linear slopes and large, shallow peaks and troughs. So it can be modeled as a sine curve tracing out another sine curve on a much larger scale. (More self-similarity!) ]

Anyway, the point is if you average out an ascending triangle as seen in the ADX in the $100s, you get an upward slope. The upside breakout represents the peak in momentum, which is a reversal signal. Same pattern, different constraints, coinciding with mathematical harmony! This is why I love TA.

[Crypt_Current]

a bunch of bear's hindsight BS

[NamelessOne]

Cool, where do you think it is going now? haha 

[arepo]

Cool, where do you think it is going now? haha  

I do write-ups about my models after my models have been exhausted (public predictions can create complications). There is more work to be done to call a bottom, and models become less accurate the more extrapolation is done. The best I can say is either a mid-term downtrend (slide) OR more vertical movements as EA's and other big wallets unload some of their coins in order to realize recent gains, and then an immediate resumption of the uptrend, as the knives will overshoot and the correction upward at the bottom will immediately be supported by the quickly growing userbase. I have no targets but we're incredibly overbought. Absolute bottom ('impenetrable support') is probably around $10-15. I have no coins, but I am no bear. I will be well-stocked in cheap coins once we bottom out.

If there is demand, I will present another write-up in a week. There will be enough new data to start projecting again.

a bunch of bear's hindsight BS

are you butthurt? this is some of the best work I've done
you're quite good at what you do, too. i would appreciate constructive criticisms, if you have any.

I'm just demonstrating TA for those unfamiliar with it.

[jl2012]

absolutely hindsight. This guy has been silent since 10 Mar and said nothing until the crash happened.

[jl2012]

His last call of "bubble top" was on 7 Mar when the price was about $49: https://bitcointalk.org/index.php?topic=147549.msg1594116#msg1594116 . And he went completely silent since 10 Mar. We all knew what happened since then.

People followed him are still losing money.

Follow him at your own risk.

[arepo]

are you guys my sworn enemies or something? geez.

you didn't even read my post. the OP is stuff that's ALREADY HAPPENED. i'm not making any predictions or attempting to garner any followers..

please stop spamming my threads with general flaming.

[arepo]

I do write-ups about my models after my models have been exhausted (public predictions can create complications)

context.

i meant that this was an after-the-fact writeup, not a prediction.

[jl2012]

I do write-ups about my models after my models have been exhausted (public predictions can create complications)

context.

i meant that this was an after-the-fact writeup, not a prediction.

What is the merit of TA if it is not used for prediction? You can always find this and that pattern by digging historical data

[M4v3R]

His analysis posted here isn't to predict the future, it's to learn from the past. TA, especially in Bitcoin world, is pretty reliable. But it shouldn't be a domain of few wise guys. It's best to do your own TA based on your risk management. Arepo's post are great for people that want to learn exactly this.

[Ichthyo]

His analysis posted here isn't to predict the future, it's to learn from the past. TA, especially in Bitcoin world, is pretty reliable. But it shouldn't be a domain of few wise guys.

Can you please stop spreading this bulshit!

TA ist a way to make statements which look serious, but have no meaning, no substance, no predictive value.


Of course it is "pretty reliable" if you are saying exactly nothing!



All of your TA statements comply to a single pattern

Event A will happen, when it is confirmed. When it is not confirmed, it will not happen.



It might be quite enticing to engage into all this math and graph drawing game. But basically it indicates that you're lacking proper education in math and engineering. The first thing you have to learn is to cross-check your own actions critically. This is what you fail to do. And as a consequence, you become a victim of your own delusions. After some time, you start to believe that all your efforts have payed out and helped you in trading.

In fact, you could have arrived by exactly the same trading decisions by just using common sense.

[M4v3R]

So how much exactly have you earned in trading using just common sense?

[Ichthyo]

So how much exactly have you earned in trading using just common sense?

probably a lot more, since I am not wasting time and energy with feeding mysefl with sick, pseudo-scientific believe systems!

[Ichthyo]

And let me add a warning to all newbies:

Don't waste any time trying to "learn" the so called "Technical Analysis"

It will cost you a huge amount of time, trying to figure out all those weird concepts, formulas and diagrams, especially when you have no scientific and engineering background. It might look enticing, since the proponents of TA claim all the time that you could somehow uncover hidden structures. But those people were never able to prove that those structures do actually exist, or are just a mental projection in hindsight.

[M4v3R]

So how much exactly have you earned in trading using just common sense?

probably a lot more, since I am not wasting time and energy with feeding mysefl with sick, pseudo-scientific believe systems!

So you sold at 260? And then bought at 110? And then sold second time at 180? Wow, I envy you.

[tripper22]

Not this shit again. Like I said before technical analysis is total bunk.

[Ichthyo]

The so called "technical" "analysis" is very similar to esoterism.

It promises to uncover hidden structures. It appeals at our appreciation for the wonders of technology. It combines allegedly technical structures with an aura of mystery. It appeals at our curiosity and readiness to "get into" more complicated matters and relations. And it flatters our ego, since it makes us believe that we have "earned" the trading gains through the effort fed into figuring out all those formulas and drawing all these involved diagrams.

[damnek]

More "technical analysis" from a guy who hasn't made a single right call.. no thanks.

[M4v3R]

More "technical analysis" from a guy who hasn't made a single right call.. no thanks.

Why I don't agree with everything arepo says, he did say that we will fall far from $7 back in January 2012. And if you remember correctly, price went down to sub $4 then, before regaining strength a lot later.