(UPDATE AUG 9) Indicators Suggest Bitcoin Poised For Upward Move

(Since this post was originally published on July 7, Bitcoin's price rose 35.9% through Aug. 9.)

At Excalibur Pro, we tend to look at a handful of indicators to get a sense of future price movement - both technical and momentum signals. One of our unique momentum indicators uses the Markov process, which takes into account recent rolling volatility and return data and looks at it against past data (we go back 5 years when training Markov for this process). What we look for of course is trends with the two states to see how they correlate with price movement. And when that at times can be hard to discern, we then look for when states cross - that can be an indicator that a price change is forthcoming. Those states just crossed yesterday (July 6). The last time the states crossed was on April 16 - and since that time, Bitcoin has fallen 44.7% in value.

Ok - so what else can help us get a sense that change is in the air? The one-month rolling volatility was at 2.95 on April 16. And it skyrocketed to 6.22 at the end of last month. Since then, it has begun to inch lower - not in big steps but a directional move nonetheless. Lower volatility often translates into higher returns.

And then we have the popular technical indicators. In the middle of May, Bitcoin's daily price began to pierce below the 50-day and 100-day moving averages and in mid-June, it sank below the 200-day moving average. It has remained at an even trajectory below the 200-day moving average for several days. Meanwhile, the Relative Strength Index has been hovering around 43.5 - just 13.5 points away from that oversold level of 30.

The indicator that is likely to presage a move higher will be the rolling volatility. Watch to see if that number continues a slow decline. And if so, it should spell some price gains in Bitcoin.