Bitcoin Price Model v1.0 updated lines (read carefully below)
Analyzing the difference between the Bitcoin price and my FairPriceLine (a price regression of the most important bitcoin bottoms), I found that the distribution of the price follows two probability distributions (i used the GMM or GAUSSIAN MIXTURE MODEL), one when the market is calm with very low levels of price deviations and the other distribution when the market tends to be overvalued with larger price movements. I ditched the previous attempt using Johnson SB distribution function.
For now, you can only see the COMBINED distribution of the two along with 3 levels of price deviations, 3 above and 3 below the central average of the distribution.
You can however, by acting in the indicator settings, turn off these levels and put back the previous ones (FairPriceLine, Midline and TopLine).
The 1st negative price deviation is almost identical to my FairPriceLine, the second and third negative price deviation has never been tested by this market that is fundamentally bullish.
The Mean Line is similar to the previous MidLine that has been obtained doing a price regression of all bitcoin historical data since July 2010.
The TopLine just moves between the third positive deviation line and the second one.
Next step is to add the possibility to plot each DISTRIBUTION PRICE DEVIATION LEVELS individually and evaluate them.
For now, you can only see the COMBINED distribution of the two along with 3 levels of price deviations, 3 above and 3 below the central average of the distribution.
You can however, by acting in the indicator settings, turn off these levels and put back the previous ones (FairPriceLine, Midline and TopLine).
The 1st negative price deviation is almost identical to my FairPriceLine, the second and third negative price deviation has never been tested by this market that is fundamentally bullish.
The Mean Line is similar to the previous MidLine that has been obtained doing a price regression of all bitcoin historical data since July 2010.
The TopLine just moves between the third positive deviation line and the second one.
Next step is to add the possibility to plot each DISTRIBUTION PRICE DEVIATION LEVELS individually and evaluate them.