Bitcoin Gold is Born
Bitcoin gold was born on Monday, October 23rd, 2017 at 19:39:25 UTC, or more precisely at block 491,407 of the original bitcoin blockchain. As with all matters bitcoin-related, things did not go exactly as planned. Bitcoin gold quickly dropped in price by about 66% and its main website was shut down buy a DDOS attack. Currently it's trading at $138.11, down 44%,
Pre- and Post-Fork Panic
The bitcoin price was jittery and volatile during the pre- and post-fork periods. Much of the weakness in the market was attributed to investors moving their holdings to other cryptocurrencies or cash while awaiting the outcome of the hard fork, but technical chart analysis continued to give very clear signals and several opportunities for profitable swing trades for calm, analytical investors who remember the mantra: stay calm and trust the math.
Retracement From The All-Time High
After the recent all-time high set on Oct 21st, a bearish divergence of the momentum indicators RSI and Money Flow Index seen in the chart below (purple and green lines in middle and lower windows), foretold the coming correction which was confirmed when the bitcoin price made several lower highs in a row. A bearish divergence is when the price hits a new peak, higher than the previous peak, while the corresponding momentum indicator peak is lower than the previous one (see yellow arrows in middle and lower window below).
The Gold Fork
Leading up to and following the gold fork, bitcoin price retreated from it's all-time high of $6190 set on Oct. 21st all the way to the 50% retracement level of $5650 where it bounced and stabilized precisely at the Fibonacci retracement level of 38.2% or $5773. This presented a very high-probability entry point and as long as the 50% level held, bitcoin was very likely to trade higher.
From the 38.2% retracement level the market traded up to $5995, an awesome low-risk, high-probability swing trade that could have netted a profit of $250-$300 per bitcoin in about 3 hours.
The Hard Part
The really hard part, psychologically speaking, is to stay calm and rational and follow the math while everyone else is panicking. After the fork, bitcoin's price plunged below the the 61.8% retracement all the way down to $5376 before rebounding. After reaching a new low well below the 61.8% support level, a long position is risky because the downside risk is huge with no significant support level in sight.
The smart move in this situation is to wait for a higher low, as seen on Oct. 25th at 11AM, followed by a higher high above the strong support level at the 50% retracement of $5645. This was seen 4-5 hours later and bitcoin is now trading above 5700.
Stay Calm and Trust the Math
Staying calm and trusting the math while prices are plummeting, and then buying when prices are down is not an easy thing to do. But as we can see from the charts, for the calm, rational, analytic trader, these strategies can be very profitable.