Do not by any means take this article as investment advice. By any standards, I know only enough about day trading to lose everything, or get lucky trying. My college education was in science and engineering. I once spent an entire summer internship cleaning special-needs turtles. After that it was a decade studying rocks and dirt wearing hard hats. Now I write code and build websites, but I have never been formally trained in investing or reading price charts. I taught myself day trading using Google, caffeine, a barrel of naïveté, and LOTS of LOTS of price chart screen time.
My day trading strategies have achieved 150% returns over 5 months through capitalizing extreme volatility. This includes the China ICO crash, which was my 2nd day of trading and a great but painful lesson for any newbie. These are relatively modest figures compared to the ~300% returns “HODLING” would have achieved had I just left it all alone. But day trading is a different animal… and I enjoy pretending like I’m in control of my money. Theoretically, when done responsibly, day trading can hold much lower risk than other strategies. Particularly in regards to the speculative nature of Bitcoin. If the market crashes, day traders can be better positioned against crashing with it. Although all of this is still high risk. So please… keep the Farm Billy.
I repeat: Do not take my advice. And as always… invest responsibly.
BITCOIN/USD
We have already seen resistance at the $20,000 mark as many great crypto analysts have previously projected. (Rakesh Upadhyay has great price analysis for a number of cryptos as seen here: cointelegraph.com). The 1-hour price chart for BTC/USD is showing signs of fatigue as indicated by a divergence pattern setup. This pattern is supported further in the 4-hour charts seen below. Some extrapolation has been assumed for the somewhat anomalous spike around $19,700, however the upward trend is still present without this assumption, with a much less aggressive nature. Not only is volume moving counter to price increase, but MFI and MACD momentum indicators are also trending down in contrast to price increase. While not the strongest or most blatant divergence pattern, it does indicate a potential shift toward downward trend and is enough for me to hesitate my own trades. Who knows… the unique nature of CME futures might obliterate any “typical” price chart behavior anyway and this whole discussion would be useless. The future is, of course, very unpredictable.
BTC/USD 1-hour Price Chart (Cryptowat.ch)
1-hr BTC/USD price chart showing potential divergence pattern. Screenshot taken ~1215pm MT. December 17th 2017 (source: Cryptowat.ch)
While Bitcoin price has been steadily climbing over the last week(s) (months/years), the presence of a potential divergence pattern might indicate hesitation regarding tonights CME futures. Whether this holds true can only be speculated as the oncoming CME futures are uncharted territory. Even experts considered Masters of the market have no clue what will happen, only speculation. Patrick Thompson wrote a great analysis on the few ways CME futures could play out for Bitcoin short and mid-term. It is very informative and (naturally) non-conclusive. If you are investing money you can’t afford to lose, consider waiting a few days to see how things shake out. But if you like to gamble, well no one is going to stop you for trying, Archie.
BTC/USD 4-hour Price Chart (Cryptowat.ch)
4-hr BTC/USD price chart showing potential divergence pattern. Screenshot taken ~1215pm MT. December 17th 2017 (source: Cryptowat.ch)
My analysis in summary: Price is either going to go up, go down, or stay the same. In other words: I don’t have advice, only observations. Which are based on my personal speculation. I have no idea what will happen. But I do know what a clean turtle looks like.
Please don’t invest money based on this article or my opinions. I can only tell you what I plan to do: Sit on the sidelines until Bitcoin volatility get’s good and frothy like a boiling Niagara falls. If it doesn’t froth up? No harm done I can resume trading once BTC takes a Zanax. Keep in mind there is always a chance Bitcoin drops allowing you to buy the dip.
Happy Trading.
Iliah M. Spector
Web Developer & Cryptocurrency Enthusiast