August 2, 2016. What Is this Date's Significance to Bitcoin?
August 2, 2016 is the last time that bitcoin's price (Bitstamp) tested the 200 Day Simple Moving Average (DSMA), this event is circled in the above price chart. Below is a more zoomed out perspective of the same chart to better demonstrate how long it has been since this very important moving average has been tested (using a log chart, this time).
The question is, of course
When will bitcoin test that 200 DSMA again? Because it WILL happen, there's no getting around it, and it certainly appears to be due for another test sometime soon.
The good news is
You're in one helluva bull market when price stays above the 200 DSMA without testing it even once for more than a year (more like year and a half) and the test is very likely to go favorably for the bulls when it finally happens.
The bad news is
Price is behaving neutral, if not bearish, since putting in it's all-time high price of around $20K and has been repeatedly testing the 50 DSMA over the recent couple of months (more frequent tests are an indicator of price breaking down and away from the moving average being tested). This, on top of the already mentioned absence of testing the 200 DSMA, and my best guess is that it's setting up to do just that in the not too distant future.
The thing is, the 200 DSMA is right around $6,800 at the moment, which is over a $6K drop in price from where bitcoin is trading right now. Below is a chart demonstrating the large gap between price and the 200 DSMA (pink line marked with a blue arrow)
Bump & Run Breakdowns
When price establishes a trend-line, or a rate of appreciation, and then increases that rate of growth to establish a steeper trend-line, it creates a bump-and-run pattern (please excuse the technical-analysis lingo).
When price confirms a broken trend-line (closing below the trend-line), the lower gradient trend-line, before the "bump" occurred, is typically tested. As you can see in the chart below, bitcoin has had a series of bump and run patterns emerge as it has consistently been revving up its acceleration of price appreciation. You can also see on that chart that the most recent bump trend-line has been breached by price, although it hasn't yet been confirmed by a price close below it.
Of course, there are no guarantees when using technical analysis on price, but history has shown us that these patterns repeat often enough to not ignore them.
I'm not trying to say
that I think bitcoin is officially in a bear-market, nor that it's imminent. All I'm saying is that a 200 DSMA test is highly probable within the next few months, IMO (and that should go without saying).
Whether that happens soon, with a sudden dip akin to a "flash crash" (not likely), or occurs over the next months as price consolidates and allows the 200 DSMA to slowly catch up with it before a much smaller price dip finally makes that test happen (more likely), I can't say.
What's the Point?
I'm a trader who relies heavily on use of the moving averages to get a feel for price "momentum" and I've seen enough market scenarios over the course of my studying and trading the markets to have a relatively decent intuition when it comes to making these types of calls.
That said, I'm careful not to call myself an "expert", as I legally have no such certification and I'll be the first to tell you that I'm nearly wrong as often as I'm correct when it comes to predicting market direction over the short to mid term (minutes to months).
In other words, pay my words mind if you deem them worthy of it, but don't be a fool and treat what I say as God's word. Your money is at stake. This is your decision to make.
I just like the selloff pattern every weekends @jamesbrown
Ifever BTC hits 10k it is sill ok and an opportunity to buy.
Yeah, me too.
I've got money on the sidelines waiting for just that opportunity.
My dude! I have been telling people they need to be prepared for a crack of 10k on bitcoin. 6k and change is even lower than I was looking, but that's the avg.
Solid info. I draw similar trendlines and didn't even realize I was doing bump and run analysis.....now I have a term for it! :-)
I've been eyeing 10K as the possible "floor", too.
Assuming that I'm right about the test being imminent, there's a decent chance that price will stay up here in the 13~17K range long enough for the moving average to catch up to the point where the test would happen at, or above, 10K.
It would likely have to stay in that range for more than a month for that to happen, but, you know what, despite having a large investment position in bitcoin, I think I'd rather that scenario play out than for the price to shoot up from here to new highs. I prefer to keep the 200 SMA close by, going for slow and steady growth versus these quick, vertical shots that are just begging to lead to flash crashes that give the profits all away in one fell swoop.
Fun fact (quoted from the link that I supplied in the original post):
...should have stayed with BARF, IMO ;)
BARF, that's perfect! Especially cus that's what the market will do if BTC was fall to the 200 in one fell swoop!
I do see a scenario where we crack 10k to freak everyone out, but just one of many possible scenarios as discussed. I would love to buy around 8,500 though :-)
haha. yes, BARF is the perfect word for that.
I'd be all over on bitcoin if it hit that level!
i still think its way below the price we are thinking right now it will sky shot up way sooner than expected
I'd be OK with that, too :)
Im newbie i want so much to leran about
Bitcoin
Then do it. You owe it to yourself!
If you're already a happy girl, you'll be even happier :)
thank for you :)
yieh ;)
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I hurd.