With market indicators and forex quotes, a great indicator for any kind of market activity is a significant bullish increase in trading volume. In this kind of market, buyers take over once the price gets higher, but sellers can not sell for long (or can not buy). To give an example: On 1/15/2016, as you can see in the image below, the price of bitcoin increased almost 200% in a day! On that day the price was around 10 US dollars. At first, it was just a few bitcoins, but it then jumped into the several hundreds dollars for a short period. But, that’s not important for you for now. What really matters are the trends which are already visible after the recent rally: the prices are rising and there are fewer short trades. A big positive sign is the high level of price in any direction, which is positive for a long-term investor. But, what about the long term traders? What happens in the long term to the bitcoin price if it increases even more? Well, that’s why all traders, even long term traders, would be interested in a price correction. And here is what we see in the figure below:
We see here a correction of about 10 pips in the price above 50 dollars after the initial rally. But that means that there were still over 1 million bitcoins in existence at that time. At the same time, Bitcoin is rising again, so we see another correction of almost one million. The reason for those two trends is that bitcoin has been being oversold, a trend we saw in December, but it’s not yet clear how big the crash was, which is why I believe the price correction will not be so large, if the last chart can be used.
What’s important for you? What do you see in this latest episode? Are you interested in investing? Let me know in the comments below!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
The following article is by Mike Krahulik. This is the third in a series, covering the upcoming 2017 NBA playoffs. See the first article , here , about what the NBA playoffs are up to. We have a long-term view of
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