Bitcoin ready for a correction

December 7th 2013 update
December 11th 2013 update
Bitcoin has gone up fast in November 2013 and now in early December it might give you an opportunity to buy at lower prices again.

I’m generally bullish on Bitcoin. I learned about it in April 2013 when it crossed $100 for the first time and studied the idea thoroughly. I was convinced and still am that it has a long way to go and will be worth much more than it is worth at the moment.

But, as this web site is dedicated to a combination of high quality stocks and options, this is a rare post outside of the normal scope.

The reason for this post is that I heard some friends say they consider selling some bitcoins at the moment. To take some profits. I am in it for the long run, I bought bitcoins and still buy using dollar cost averaging to accumulate bitcoins.

Screenshot from 2013-12-04 15:50:41

The daily candlestick chart of bitcoin vs. the USD on Mt.Gox looked very familiar to me and convinced me to sell some bitcoins, if and when the value drops a bit, I will buy back more bitcoins.

The high of $1242 from 6 days ago is tested again today. If you look at

the MACD-Histogram, you will see that it is not matching the pattern of the price movement, it is steadily declining.
Don’t take me wrong, I sold only a small part of my bitcoin holdings as an amusement ride. Most of my position is a long bitcoin one.This is a classical divergence and could be a sign that the bitcoin price is about to drop sharply to $800 or maybe even lower, this is the level of the lowest price in between the two high prices 4 days ago.

I will be amused if the drop in price will trigger a media frenzy where they will call it an instable asset, not suitable as a currency and too risky to use in any way. This may actually help the down movement I anticipate here.
rough a rapid up trend similar to November 2013 to the next level.Later on, the media will neglect bitcoin and it will stabilize around a new level, at the neighborhood of $1000 for a year or less, then it will go th

What do you think will happen to the price in the coming days and weeks?

—– Update December 7th 2013 ——

btcusd-dbltop-success

Well, I hate to say I told you so, but it has crossed $800 and stayed below it a significant amount of time. It actually reached $650 for a brief moment and is hovering at $700 in the past 5 hours.

That’s what I like about doing technical analysis on low frequency charts. I have time to react without being myopic and glued to the screen minute by minute.

—– Update December 11th 2013 ——

No image this time, I’m sorry. Many people ask me did we reach the bottom, or what does my technical analysis tells me now and why don’t I share it with you all?

Well, the sad truth is – I don’t know. I do know a lot about technical analysis but most of it is bullshit…

The rare situations where technical analysis can tell me something with a high enough reliability, that’s when I write about it.

In the long run, I believe bitcoin will go up by a large margin. In the short term, patience and sticking to one’s plan is the best course of action.

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