Optimized EMAs Point to Bear Market

Optimized EMAs Point to Bear Market
Bitcoin / U.S. dollar BITSTAMP:BTCUSD
This_Guhy

I mention this every so often, but about a decade ago ETFHQ.com did a indicator on which moving average settings would get you the best gains and they came to the conclusion that can get the most gains with the least work looking for the crosses of the 13 and the 48 weekly EMAs. This chart shows the 4 available crosses on Bitstamp (I had to add the first one, but its valid on BLX . The others were added by the CM_Ultimate).

The chart suggests we are about to have another cross very shortly. Price actions is under both of these EMAS and that is a whole lot of resistance to get through. If you pull up your SMAs you will see we are perched on the 100W SMA and while that would normally seem like strong support it looks like it won't be a platform to rocket to the moon.

ETFHQs words: http://etfhq.com/blog/2013/01/15/golden-cross-which-is-the-best/
Our testing revealed that the EMA produces better results than the SMA and the best settings are that of a 13 / 48.5 EMA Crossover. The long duration of the trades produced, ability to sidestep bear markets and the high probability of profit make it worth testing as a major component in a complete trading system.

So right now the EMAs are about $90 away. There is still the chance of a ill-advised rally, and an even smaller chance that the price surges so impulsivley that the price cross is avoided. And there is the argument that these EMA settings were never tested on Crypto, which would be the most valid criticism.

My strongest preference for a moving average cross is for the price actin to be between the moving averages for an extended period of time. That gives you a lot more certainty on setting your entries and stop losses based om the moving averages.

I think the strongest argument for this case was the 50-200 3 Day SMA cross on bitcoin . In this bearish case, a extended period of compression between the Moving averages, price a action slips the shorter term moving average, cliff-hands a little bit, and then loses its grip and impulses to the dirt. To be clear, that is not the circumstances we have currently on bitcoin , those are the optimal for entry confidence on moving averages alone.


Price action can still thrash around a bit but the bias, pending 100% confirmation, is bearish . The 48 EMA is still slightly driffing upward and since my exchange only lets me hold my position for a month I might get timed out for a slight loss in three weeks or so. Can be kinda annoying but I'll look for another technical entry and get at it again.