Bitcoin Trading Chooses The Upside

After analysis had been posted, yesterday, bitcoin trading bought price up in a surge above resistance. Although more upside may be in store there is another upside technical hurdle looming on the horizon.

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Bitcoin Trading and Price Analysis

Time of analysis: 15h03 UTC

BTC-China 1-Day Chart

BTC-China 1-Day Chart

From the analysis pages of xbt.social, earlier today:

The 1-day chart shows that yesterday’s volatile move was technically justified:

MACD (top) has been steadily rising since the late-September low near $220 / 1450 CNY with a major reverse divergence looming but not yet in effect (green arrow, top).

RSI (third from top) had, correctly, indicated a higher high to the previous higher high of price (blue annotation).

In the BTC-China and Huobi charts the green 20MA crossed above the red 200MA and price dutifully pushed higher. This cross-over has not yet manifested in the other exchange charts, but we had confirmed in discussion and comments that BTC-China and Huobi (and to some extent their leveraged proxy, OKCoin) were leading the rest of the exchanges.

If today’s candle closes on a higher high to RSI divergence in the 1-day chart (magenta annotation) then a correction to test support could be expected. In the BTC-China and Huobi charts the support level is 1600 CNY ($250) – a key level that we’ve been watching.

Focusing on BTC-China and Huobi, the absence of any MACD divergence (regular or reverse) implies that another high may be in store. If market participants attempt this, price will first have to correct downward somewhat – conceivably to test support at 1600 CNY ($250) in these charts. If the market pushes higher, once more, then the looming MACD reverse divergence is the key upside reaction level on the horizon (green arrow, top).

To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate. – Jesse Livermore

Summary

If yesterday’s surge caught you off-guard then take heart from the fact that this had been most traders’ experience. What xbt.social traders had anticipated, happened – only in a manner that took most (and at least, this analyst) by surprise. Unexpected price action, bursts of volatility and price chart surprises are, after all, why speculation is described as a “high risk activity”. All successful traders acknowledge this fact and advise us to take precautions against moments of chaos in the market. Refrain from anticipating the market and only trade valid signals – it means that we might miss some moves, but in the long run the strategy will protect capital.

Bitfinex orderbook depth and Buy/Sell Volume:

 Bitfinex depth buysell volume 21h55 141015

Click here for the CCN.LA interactive bitcoin price chart.

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Disclaimer

The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.

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