This is Tai Zen, currency analysts for PrisonOrFreedom.com. It’s a freedom blog where we talk about the tools and the technologies and strategies that allow us to find freedom in our health, wealth, and relationships.
In this video I’ll be talking about the currency analysis episode one where I’ll be focusing on Bitcoin – a currency to serve the 99% on Main Street versus the 1% that’s on Wall Street. Let’s go ahead and get started.
I personally like to use this analysis platform here when I do my currency analysis, I like to use TradingView.com. I am not related to them in any way and it’s the only platform I’ve seen so far where I can get some pretty decent and accurate currency analysis, especially in the cryptocurrency area. So that’s why I’m using it here.
Let’s go ahead and get started off by… if you’re following along with me and make sure that you type in BTC USD, for some of you guys that are just starting out and you can type it in over here or you can type it in over here. BTC stands for Bitcoin and the USD stands for the US Dollar.
So basically what we’re doing here is we’re taking a look at the analysis between the value of the Bitcoin versus the US Dollar. If you’re not familiar with the Bitcoin, please watch my other videos on Bitcoin to give you a little in-depth view from a non-technical perspective about Bitcoin so you have a better idea about what it is.
In this particular series of a currency analysis, I’ll just be focusing strictly on analysis only, I will not go into the complexities and the details about Bitcoin, the Euro or the US Dollar, anything like that. So it’s strictly analysis based on the facts that we see in front of us.
As you can currently see right now, the market is falling, it’s 681. And if you look across the top here, I have it as a daily chart. You have an option to look at it from a candlestick perspective here. You can look at it from a bar chart perspective. When you click on that it becomes a bar chart or if you’re old school and you just want to focus on looking at the line charts and you can switch it to the line chart.
So this toolbar up here allows you to switch between charts, out of all of these the one that I find personally and from many of my colleagues that are the most useful is the candlesticks, the Japanese candlestick charts that were invented by the Japanese rice traders from the… I think it was around the early 13, 14, the 1500s in Japan.
So anyway let’s start off by clicking on here and we have the different timeframes here. I always like to start off with the daily chart first just to get a big picture overview. And you’ll notice in the background, in case you forget that you’re on a daily chart, you can look at the background here, that’ll tell you that in light grey here in the big letters. It says BTC USD for Bitcoin, US Dollar. And then the D stands for daily chart. And if you click, let’s say for example, right here, it will switch to a 60, which stands for the 60-minute chart or the 1-hour chart.
So let’s go back to the daily charts here. When we do an analysis of Bitcoin or any currency, it’s important that we get an overall idea of where the trend in the market is at. So in this particular case, I’m going to scroll the wheel on my mouse here and you can see how it expands and if I scroll it the other way, you can see how it contracts.
So what I want to do is I want to make sure that I can get as much on here as I can and if you come over here to the price axis, you can also compress the price or decompress the price. And for example, if you happen to decompress it, I mean you compress it and you want to reset it, you can just click right here to reset the chart and it’ll snap back to where it’s at.
Whichever methodology that you look at, make sure that you continue looking at it the same way so that it’s not confusing to your eyes so that your eyes have a consistent view.
You can also use down here the plus to magnify and the minus to un magnify, and then the arrows here will jump left or jump right. And then you also have the timeframes down here for one day if you just want to look at one-day analysis or five-day analysis, things like that.
So I’m going to go back to the daily charts. And then on the left side here, we have some of your typical technical analysis tools and then you can select the support and resistance, parallel channels, regression lines, get the pitchfork and a bunch of other fancy stuff here. And then you get your different shapes, ellipsis, triangles, and letters, then you can type in text, call out balloons, and then here’s thumbs up, thumbs down, arrows to show your entries and exits. And here are just different patterns. And over here is the long short positions and more.
And as we go through these currency analysis videos, you don’t have to learn all those technical analysis tools right now. Just follow along with me and then we’ll learn as we go along together.
It’s important that you understand the overall general trend of the market. So if you take a look here, the last trend…I like to click on it and format it, and I like to use a solid line. That’s just a personal preference. Nothing more. And so right there.
So if you can take a look here, if we magnify this a little bit, you’ll notice that a trend line… we normally draw trend lines… Some people like to draw it from the lowest low to the next low. So if I draw it here, you guys can see that if I touch the tip of this, the tail of this green candle here, and the tip of that right there, you’ll see that it hits this and you’ll notice that it has broken this in the last couple of days.
So because of that, we have to readjust and recalibrate our trend lines to see the next point. So what I’m going to do is I’m going to draw the trend line right here and go to the next low point, which is right here and you’ll notice that prices now hammering against this.
And if it keeps hammering against that, we can expect that once it closes right now, I would not be so concerned because it’s just peeking through that trend line. What I like to see is a close below it and then a pullback and then a further breakdown before I’m convinced that that trend line has been broken.
So you can look at the long term trend and see that it’s gone up since it broke that $256 high in the past and I shot all the way up to here to like 1240 or so. And now it has fallen back. Now a lot of people are panicking about this, the way I look at it is that if you look at the past history of Bitcoin, you will notice that the fall from the last previous run up 266 here or 265 all the way down to when it reached a $49.
I did the math previously. And it’s like an 80% drop. So if you go back even further in history when the last big move happens, there’s always been at least a 30% drop on Bitcoin. And the last one was around that $30 mark somewhere. Let’s just see where it was at. So the last time you reached before that, there was a $32 mark and it dropped all the way down to like near $2. So that was an 80% plus drop.
And now if we move forward in time. We can see that it has another 80% drop at the two 66 to $65 mark. And then now we have another pullback, a fall from 1240. So if history repeats itself, we can expect that it’ll fall from here all the way down to here.
However, if we take out our trusty calculator here and we typed in 1240 times 0.2. We have a price target of close to $250, 248, let’s just round it off to 250. Which means that if it history repeats itself, there’s a good potential that this could be somewhere around here.
Now, when I look at this, I really don’t see any support or resistance level here. So in this particular case, I would have to say that it’s… I have a price target of if it was to make a big…close to 80% of what I would consider a gigantic retracement like the two previous times that it’s set new highs, then I will expect it to come down to somewhere around 332, somewhere around here, wherever the price is, right below here, before it took off to this area here below the wick, which is about 288.
So I would see it like around the low 300 or below 300. If history repeats itself. The reason why I don’t think that history will repeat itself, the 80% pullback like it did the last two times is because the cat’s out the bag. People realize the value of Bitcoin as a currency, as money and as a money transfer system, as a money payment system. So a lot of people are seeing the value and the benefit.
There was a poll a few weeks ago that was done, I think it was either by Bloomberg or somebody, one of the popular media channels and they said that 42% of the people in the survey indicated that they knew what Bitcoin was. Whereas in the past year or so, not too many people knew what Bitcoin was.
I actually found out about Bitcoin from one of my colleagues in the energy business. And I knew about it in December of 2012. Started researching it and taking a look at it to find out what it was all about and did not participate in. I did not actually buy my first Bitcoin until it was around $166.
I would have bought it in earlier but at that time I was going through my third near heart attack. So I had to go to the hospital to get some more stints in my heart. So I was stuck in the hospital while the price was going up even though I finally found a reliable place to buy the Bitcoins – Coinbase, I was not able to actually do it until I got out of the hospital. It’s ok, I still got it in early and I locked in some profits.
So that’s not a big concern for me. What is a concern right now is that this goes around since the price went up to about over $1000, there has been a lot of nervous novices that have entered the markets? So we have huge fluctuations in the market and in addition to the nervous novice, we also have a lot of what I considered to be a lot of algorithmic trading and this happens quite a bit in the in the stock market and the Forex market.
And I’m starting to see clues in the price charts here that that is also happening. So especially around areas like this right here and around this area here. Later on when we zoom in, in a future analysis report, maybe we can take a look at that and you can see, and I can explain to you how to spot when the algorithms are trading, but basically when we zoom into the 15-minute charts here, you’ll notice how tight these price ranges are, you’ll notice that it’s a steady…
If you take the top of this right here, it’s 914 down to about 902. So there’s like a $10-12 range that you’ll notice that the price consistently falls in. And that is usually a classic sign that there are lots of algorithmic trading going on to produce that.
Normally in a lot of individual traders at home trying to scalp the markets. So that’s what it looks like right there when there was people scalping and there’s algorithmic trading going on. Some people call this a bot trading or robots and I know that the people that develop the bots, they consider it the same as algorithmic trading. But I haven’t little slightly different view between robot trading and algorithmic trading simply because the algorithmic traders are usually more advanced, they have more money and they’re more experienced.
I’ve seen a lot of people talk about bot trading or robot trading, just from the way that they talk about trading, I’m not convinced that they fully understand the mechanics of the market and how it’s, how it’s being traded. So that’s just my personal opinion based on my experience in trading.
Let’s go back here to the 1-day chart. So there’s basically only two things that can happen, or three things that can happen in the markets, one is that the price can continue to fall or it can reverse here at this trend line and go back up or it can just meander sideways and just go sideways.
So there are three ways that the marketing can go from here, go up, go down, or go sideways. So let’s take a look at the analysis of what happens if the market were to fall down some more. And what we can expect from a technical analysis perspective of where the market can possibly go if the market breaks this price line right here of 690, which it has and it continues to break the low of this candle at 651 or a 615.
The next bump in the road will be right here at 627. So there’s like a $25, almost a $25 gap between the bottom of this candle body to the tip of this. And so which is not very far because if we take a look at this right here, let’s add this one indicator here. The average true range.
I like using the average true range when I do chart analysis because that gives me basically the miles per hour or the kilometres per hour. So when you put the ATR, the average true range on here, it’s not really that important to see the hills and the valleys in this.
What we’re basically looking at is this number here, the ATR (7) and 102 that’s over here in the red. What the 7 means is that it’s taking an average of the last 7 periods or the last 7 candles. Whatever the range is from the highest to the lowest and it adds it all up and then it divides it by 7 and it gives you $102, meaning that the average movement of Bitcoin in the last 7 periods or 7 candles.
So basically what you can say here, just from this daily chart, is that Bitcoin is moving an average of about $102 or $103 a day on average if you take the average of the last 7 days’ movement from the highest to lowest and divide it by 7.
Now to smooth things out a little bit. The most common ones for a daily analysis is usually 7 or 14. In this particular case, if we change the input to 14 periods, in this case, it would be 14 days. You’ll notice that the average movement in the price of Bitcoin jumps up to $175 because now it’s taking into account these long green candles. And this’s a red candle as well. So it goes 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14.
So it takes the average of this green candle all the way to this red candle, adds up the total of the movement in price during each day and then divided by 14. So since these big movements are an anomaly, it’s not common.
It would be better, more beneficial for us to change this to 7 so that we have a more up to date because if we say that it moves an average of $102 a day, that is more realistic of what the current market conditions are versus saying that it’s $175.
So normally we would change this between 7 and 14 and switch it back depending upon what the market conditions are. So if the price falls, we can expect it to… This area is very, very important right here because of the way the hammer is shaped.
So I would say that this would be a good one area that you will take a look at of a price bouncing from here. And I’ll talk about later on why it bounces here. For now, let’s just make a note that you will come to here if you missed this entire move up here…believe or not, even though the price is falling right now, right here is probably one of the low-risk opportunities to go long simply because you are at the trend line.
And you might say that “Hey Tai this is breaking the trend line”, yes it is breaking the trend line, but it has not closed yet. If you want to be a little bit more conservative, you can wait until it breaks, closes below here and wait until prices back up to here.
So the top of this red candle right here, here is about 712, 713. If you want to get into conservative long, you could wait for it to come back up to here and then a take it long from there.
The other thing too is that if it breaks below this 627 line, we can expect it to come down to this. Now, if it comes down to this 627 or this 575, if it comes down to the 627, then this trend line is no longer valid, so we have to readjust and use the next available trend line which would be from about right here to the low of that.
So if it comes down further and you can expect it to come down to… I know a lot of people would say that this right here, but I will actually put that in line as the next significant support level simply because this is where the first big launch began right here on that green candle, so it has a lot of significance right there.
Now we could go further and take a look at this right here, which is also very significant, even more, significant than this one. However, I don’t pretty much care to go more than three support levels this way. And then three resistance levels on the top side. So let’s take a look at the top side.
If you were to go long here, we can expect it to come up to at least… somewhere in that area right there where the price began to drop, which is about 920. So once it gets up to there, you can either take a look at locking in profits or take a look at moving your stop losses up.
And by the way, if you did decide to go long here, your stop loss ideally would be below the top of this, which is about 650 and if it breaks below this line and for sure you need to get out of that long trade.
So once it goes up to here, the next available level on the resistance side would be somewhere around here. I would say right there just to be safe. That’s another sticking point from here to about right there that I would have to take a look at, maybe about right there simply because it’s touching here and there is a sign of when that candle right there started.
Now if you want to be a little more conservative, you can use either the top of this green body or the top of this red body right here, either one is fine, there’s no right or wrong, it’s just a matter of do you get out earlier or do you get in earlier and that’s about it. And if it breaks above this area right here, then the next area for sure that is going to come up to is to retest the all-time high, close to the 1240 mark again.
So that right there gives you three levels above and three levels below so that you can have an idea of what to expect right there on a daily chart. So let me go ahead and conclude that this first currency analysis I do here for the PrisonOrFreedom.com and we will continue this at another time.
Thanks for visiting a PrisonOrFreedom.com. If you would like to learn more about currency analysis and the things that allow you to obtain freedom in your life, in the areas of health, wealth, or relationships, please subscribe to our channel and I’ll see you in the next video.