Bitcoin and Dow to continue smashing record highs

Bitcoin (BTCUSD)

We’ve quite strong suspicions about crypto-currencies, primarily due to reliable historical information as quite a few of the exchanges seem to be run by enthusiasts giving widely different rates. In fact, it’s very similar to sterling’s relationship with the euro currently.

However…

From the start of September this year, it seems bitcoin is starting to represent a “proper” pairing, as its relationship against the US dollar illustrated some volatility which, from our perspective, made sense.

Rather effectively, a considerable effort was made to introduce a proper trend in the relationship, one which suggests further upward moves are possible.

The situation now is of growth above $5,850 leading to $6,395 initially with secondary, if (when) bettered at a longer term $6,595. If our reading of the force applied is correct, opening a short at $6,595 with a seriously tight stop should make a lot of sense.

With this sort of nonsense, generally an attempt to confirm a trend occurs and, in the case of bitcoin, reversal to around $4,000 should work!

The Dow Jones (DOWi:DJI)

Some months ago, we’d postulated the Dow Jones reaching 22,390, perhaps even 22,480. We’d a fairly major problem at the 22,480 level as the index could not exceed such a point, at least according to our software.

Needless to say, the Dow quite cheerfully ignored our handiwork and continued skyward, humiliating our big picture logic.

We’ve spent rather an absurd amount of time on this conundrum as it’s uncomfortable to say the least. Something surprising has become evident.

When we examine individual components of the Dow Jones, they continue to behave logically.

The problem comes with the number opting to head in the same direction at the same time. This has created the current situation, defusing the argument which demands the index drops just because it’s so high.

In fact, if the banking sector opts to become fully involved in this surge of optimism without other sectors experiencing reversal, the Dow could continue considerably higher, forcing us to examine our conscience around the 23,500 level!

For now, about the sanest thing we can consider is suggesting points where a short is liable to become viable.

Visually, anything now below 22,990 should indicate the immediate uptrend has failed, perhaps signalling a bonk coming against the prior uptrend at 22,880 points.

If 22,880 were to break, an attempt at 22,275 makes sense. And if 22,275 breaks, things get quite serious as 21,000 awaits.

That’s about it. We’re left to consider common sense currently as mapping every single component of the Dow Jones revealed nothing other than a continued bias upward. For now!

 

Alistair Strang has led high-profile and “top secret” software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know “how it worked” with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, Shareprice, or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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