Bitcoin, Chart Reading and STOPD Levels

I was asked if chart reading works with Bitcoin. My answer is yes. From 5-minute resolution to its daily charts, chart patterns work very well with the virtual currency ever since the various exchanges provided the means to buy and sell Bitcoin easily.

I was also questioned by many if STOPD would work with Bitcoin because it is such a new market and not having that many players. What many people do not understand is that the dynamics of a market, any market, is governed by the goal driven nature of the participants. The moment you have at least 20 to 30 participants active any moment trading a market, STOPD will give you useful information.

Here are some interesting charts of Bitcoin.

1. 1st quarter of Bitcoin range bracketed in blue lines, its 150% expansion highlighted in orange, 200% expansion highlighted in red and 300% expansion target highlighted in pink.

Bitcoin reacted to the target levels and then pullback to 50% of 1st quarter range before finding support.

Some people call that coincidence. I call these expected outcomes.

2. The year range highlighted in blue.

Correction back down to 50% of the year’s range and then one more push down to the Fibonacci fans’ favourite at 38%. Since Bitcoin participants are not in general engaging in market making activities, it has a higher tendency to hit the Fib ratios as I explained in STOPD.

3. Double top break

Pure classic double top play with 50% target (orange line) tagged first (left green arrow) and then 100% target (red line) tagged later (right green arrow).

4. Measured move

Measured move highlighted in dark red.

5. Trend line break

This one is in progress. From what I see, $1300 is in the card.

For reference to the chart patterns, see Art of Chart Reading

STOPD refers to my ebook Special Theory of Price Discovery

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