Bitcoin – can we use a technical analysis?

The topic of crypto currency is the first line in all major electronic media, and I decided to analyze Bitcoin more closely for the applicability of technical analysis methods familiar to Forex.


Working on this review, I remembered the lines of the popular Russian underground band “Ноль” from the song “The Wandering Biorobot”:

“Minutes Count Days
Days count years
You stand on the road
Not knowing where to go
The future is fog
The past is a fraud
And tell me what you dream about –
Wandering Biorobot “
It describes the situation very accurately, does not it?

The first question arose as soon as I opened the terminal. Today, all reported the achievement of Bitcoin 10 000 USD. However, in my terminal, the maximum value is 9903.99. The difference is very significant. What are these – different exchanges, broker commission or something else? Let’s look at the daily chart.

Bitcoin Daily

We see a rocket flying away skyward (by the way, glasses have nothing to do with it – just like that). For me, the history of Bitcoin began on January 4, 2017, when the whole Internet exploded with reports of the first time reaching $ 1000 for a crypto currency (on the chart, a red vertical line). A year later we are already in space – 10 times more expensive, in other words Bitcoin grew by 900% !!!!!!! Class. Let’s go. We apply the levels. The tool retests the levels quite clearly.

Almost all day levels are mirror, but at each level there are no more than 2-3 touches, which does not allow speaking about any of their strengths. But they are and it’s good. An ascending channel can be applied only on two Low and High, which is not dense. But the last gap was leaning on the upper boundary of the rising channel. The picture on D1 immediately suggests the culmination of purchases (for a culmination read here). Note that the distance between the levels increases, like the upward impulses (light green lines, this indicates a strong trend movement, and can not continue for so long.) We descend to H4.

Bitcoin H4

We plot 100 exponential averages for D1 (violet), H4 (blue), H1 (red). How to plot the average from different timeframes read here. Define short-term support (green) and resistance (red). We insert the MACD oscillator. In general, there are practically no differences from the analysis of other instruments. MACD gives clear signals, works out divergences (orange arrows), allows the use of trend lines. The averages also confirm a strong trend movement and behave as on the charts of currency pairs. Pay attention to gaps (blue arrows). More than half of the weeks for the period on the Bitcoin schedule opens on Monday with strong gaps. This Monday, the gap amounted to 966.19 USD or 11.7% of the closing price on Friday. Madness. And immediately the conclusion is that leaving open positions for the weekend is prohibited.

As a result, we can say that Bitcoin, like any other financial asset, is perfectly capable of technical analysis. We used a basic set of analysis methods – levels, channels, oscillator and trend indicator in the form of 100 EMA from different timeframes. Any trader can use his usual system for analyzing and making trading decisions.

The question in the other is in the risks. Trading on the basis of only technical analysis without understanding the situation as a whole is extremely risky. But with an understanding of the situation and affecting the course of Bitcoin factors all have a huge problem. In fact, the Bitcoin exchange rate is currently regulated exclusively by market speculative factors. It is pure as a supply-demand theory. Only buyers and sellers. There are no laws, no regulators, no issuers, no owners, no directors, no politics and other usual risks of any other assets. Stop. How not. Yes, state institutes do not have influence on the issuance and turnover of the Crypto-currency, but they have a huge influence on the process of exchanging crypto-currency for the money we are accustomed to. And right up to a complete ban in a number of countries. And this, in my opinion, is the main risk of working with crypto-currencies at this stage. Remember the lines from the song at the beginning of the post – “the future is fog, the past is a fraud”. Therefore, I personally am in the near future “on the fence”, but I closely monitor the development of events. After all, the idea of ​​a world of money without a state and control is very tempting, although it is vague. And how about you? Are you ready to trade crypto-currencies?

Developments in the market of crypto-currencies are developing with frightening speed. Continuation of history read this link and here.


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