Post
Topic
Board Speculation
Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
by
rpietila
on 27/04/2014, 13:47:56 UTC

Some basics if you want to use the exponential trendline, or contend against its use. Two things must be observed:

- The base value of the trendline
- The deviation of the current price from the trend, expressed in log10 units (1 unit = price is 90% lower or 900% higher).

The range where the deviation typically wanders, which is seen as booms and crashes in the price chart, is -0.4...0.5 log units.

In 2014-7-15, for example:

-0.4 => $0.75
-0.3 => $0.95
-0.2 => $1.20
-0.1 => $1.53
0.0 => $1.94
+0.1 => $2.47
+0.2 => $3.10
+0.3 => $3.95
+0.4 => $4.90
+0.5 => $6.30.

This is a very wide range (basically a whole order of magnitude), so the trendline price in any future point cannot very accurately predict what the actual price in that point is. In the short term, the obscene range makes it useless, in the longer term, there are other uncertainties.

What it can do, however, is to gauge the buy and sell zones, which are points where the current price deviates from the trendline price significantly. At present we are in buy zone, because the current price is about -0.35 log units below the trendline price. Similarly in November we were in sell zone when the current price was over 0.4 units above.

The next sell signal comes when the price goes to 0.4 the next time, and it is unlikely to happen before July, so it is likewise unlikely for the top to be any lower than $5k.

In 2013-11-23 it gave a sell signal at $872. The buy signal came in 2014-3-30 at $460.

For the funds that were thus risked, the return was +90% in 4 months.