Runs from the 100 and 200 hour MA (again).
The price of Bitcoin has run higher - despite the doom and gloom comments from ECBs Hannson (see Adam's post here). In reality it may come to fruition but we must remember, it is what HE thinks. What he thinks does not really matter as he can't move the price $1. "The market" moves the price, with the "market" consisting of all the buyers and sellers. When buyers overwhelm sellers, the price goes higher, no matter the "thoughts" of a trader or even an ECB official.
The price action does not lie. Applying tools to the price action is also a way to understand the bias (bullish or bearish).
Looking at the hourly chart above, over the weekend - and even into last week - the price was trading above and below the 100 and 200 hour MAs (blue and green lines) On Friday, late in the day, the price fell below those MAs but found support buyers against a lower trend line. Buyers stayed in control.
On Sunday, the price fell back below the MAs (blue and green lines) and this time fell below the trend line to a low of $3756. That is bearish. However, when trading something like bitcoin, you have to limit your risk.
As a result, when the price moved back above that trend line (after one bar below the trend line), and then back above the 100 and 200 hour MAs, suddenly buyers started to overwhelm the sellers. The price moved from $3756 to a high on Sunday of $4088. That is an 8.8% move. Trader's who listened to the clues from the price action and technical tools should have exited before that 8.8% move, and if they got on board, would have made a tidy return on the trade.
The lesson....listen to the price action and tools applied to the price action.
What next?
Staying on the hourly chart above, the topside trend line comes in at $4141. That is the next target. The $4175 and then $4239 are swing highs from December. Get above each, and the bulls/buyers are taking more control.
What would hurt the bias?
The 100 and 200 hour MAs are risk levels. Move below would be more bearish. The good news is they are moving higher now. They are at $3863 and $3822 levels. Anything closer?
Alternatively, if you drill to the 5 minute chart below, watch the 38.2% and the 50% retracement areas. That area comes in at $3922 and $3961 levels. The low off the high has stalled at $3968. So the buyers remain in control. A move below muddies the bullish waters for me and could lead to more selling toward the MA levels.
PS Over the weekend, a podcast on Bloomberg caught my attention. It was titled "What One Trader Learned By Riding The Bitcoin Boom All The Way Up Then All The Way Down". It is about 45 minutes long, so block some time, but if you want to know how NOT to trade bitcoin (or trade anything for that matter), take some time and listen to it.
He is a classic example of believing what HE thought vs. what the "market" thought.
Ironically, however, he has a slew of others just like him who follow him online and says he makes about $10,000 a month despite losing all his 7 figure gains. Which proves misery loves company but if you are a trader, the best advise is don't do what he did. He does not give any advise as what to do - he still believes in Bitcoin. So I am not sure what he learned.
For me (and hopefully for you), looking at the pictures (i.e. charts), tells the story about the "market".. This way, if bitcoin "dies" as Hannson says, you will know well ahead of it's death (like when the price goes below the 100 and 200 hour MAs).
