Just kidding. In reality Bitcoin just goes up and you can use the technicals to protect yourself.
The price of bitcoin has moved higher today on the back of the BOC hike and hurricane Irma concerns. ; ) (that is a wink).
I am just kidding (although the hurricane is not a kidding matter. Thoughts and prayers for those impacted).
The reality is the price of Bitcoin just goes up (until it doesn't). As traders we need to a tool that will tell us the bias is no longer bullish (bitcoin has a bullish bias). I have found the 100 and 200 hour MAs do a good job at telling the bias.
The price of bitcoin earlier this week declined after China banned ICOs (another new bitcoin term for Initial Coin Offerings). That is the bitcoin equivalent of IPOs or Initial Public Offering.
As per Investopedia, an ICO is defined as:
"An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin."
HMMMM. Not for me.
Anyway, the price of bitcoin fell sharply on Monday. Technically, the move fell below the 100 hour MA (blue line in the chart above- it gapped to the MA on Monday) and continued the decline to the 61.8% of the last move up from the last corrective swing low from August 22.
From that base, the price started to climb higher and in trading today the price moved back above the 200 and 100 hour MAs (green and blue lines). The market tends to use the 100 hour MA as a barometer for bullish and bearish. So the move back above is bullish. Stay above (it is currently at 4553.89) and the buyers remain in control. Move below and get out (traders will probably use the 200 hour MA at 4513.46 as the sell signal).
As mentioned in previous posts, I do not understand bitcoin, what makes it work, why it is so great. In reality, I think it is T-R-O-U-B-L-E, with a capital "T" (and capital the other letters too). As risky as bitcoin is, I cannot fathom the thought of investing in a ICO.
Nevertheless, if the market is open (not the weekend) and you have confidence in your broker and the liquidity of the market, the technicals can show the way and give you bullish above and bearish below signals.
With the move today above the 100 hour MA, whether it was BOC hike, hurricane Irma, ICO, or other news unbeknownst to me, the price action says bullish/buy. If bitcoin goes to 5,000, 7,000 or 10,000 I don't know. However, it could as all it takes is more buyers than sellers and the bitcoin marketing machine is constantly pumping the market.
What I do know is stay above those MAs and the bulls are in control and the bitcoin marketing is getting more people sold on it's story. Ride the bull. Remember to take your profit and don't stay long into the weekend.
But if it goes below the MAs, just hit the sell button and GET OUT.
