UPDATE (21:45 GMT): Finally just saw the volume we’ve been looking for, predicted jump materialized. UPDATE (16:44 GMT): Gox DDOS confirmed. Our prediction of a continuation pattern proved correct (97.5 now vs 91 at posting) and we maintain a positive bias, though proper breakout catalyzation may be difficult with the trickles of volume making it […]
The post Bitcoin Trading: Volatility Squeeze Points to Breakout, Bias to Upside appeared first on The Genesis Block.
UPDATE (21:45 GMT): Finally just saw the volume we’ve been looking for, predicted jump materialized.
UPDATE (16:44 GMT): Gox DDOS confirmed. Our prediction of a continuation pattern proved correct (97.5 now vs 91 at posting) and we maintain a positive bias, though proper breakout catalyzation may be difficult with the trickles of volume making it through Gox. Stay tuned for updates.
UPDATE (13:01 GMT) : Looks like Gox is down. Potential DDOS. May drastically affect the time-sensitive nature of trend analysis – further updates once the situation is resolved.
Once again we’re seeing a notable low volume volatility squeeze. In shorter term trading it’s forming a symmetrical triangle – generally considered to be a continuation pattern. In this case, it occurred after a climb from the low 80s up to 95, which would indicate a continuation upward. While symmetrical triangles are known to break in either direction, we see a strong bias to the upside. Look for an upward breakout beyond the bound of the increasingly shallow triangle accompanied by higher volume to signal a 10-15 point jump. In the chance that the triangle breaks to the downside, we wouldn’t be surprised to see a sharp fall off to test 55 again.
In this case, the upside bias is reinforced by longer term upward resistance testing around 95 while sellers appear to be weakening, developing an ascending lower bound. As our readers know by know, this ascending triangle pattern tends to signal an upward breakout. If that 95 bound is broken with any respectable volume, again look for a jump upwards in the 10-15 range. You’ll see from the second chart below that we’re now pushing back up against the same 95 bound we used to predict the drop a few days ago.
Below is a chart showing Bollinger bands over that last few days. This offers a helpful visualization of a volatility squeeze as the area between the bands narrows significantly. On the right is where we are now where you’ll notice the bands are tighter than they’ve been in days.
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