The reasons for the fall of Bitcoin. Was it possible to predict?
6 months since the cryptocurrency is in sideways movement. On November 9, the semi-annual low is updated. What was it, a false puncture or the beginning of a new downtrend? Let's try to figure it out.
1.ADX
The ADX indicator signals the emergence of a new trend. Actually, this indicator served as a trigger to start analyzing the situation with Bitcoin. Because before starting a movement from a long and protracted flat, it is interesting to understand and figure out whether it was possible to predict the direction in advance, not for a crypto expert. ADX also shows the direction of price movement, which can be seen from the DM+ and DM- lines, and now there has been an impulse along the DM- line, which is significantly higher than the DM+ line, which indicates the presence of a short direction. ADX will go above 25% in the near future, which will mean that there is a trend in the market. ADX - short.
2. Fundamental prerequisites
According to COT reports, sales have prevailed over the past six months. Almost the entire 6-month flat was sold. The classic long situation looks different - a fall in prices and a simultaneous increase in long positions by hedgers. The Fundamental is for short.
3. Cumulative Delta Volume
An excellent indicator for determining a set of positions when in long-term consolidations. The current consolidation is very long and, as the indicator shows, the Delta was accumulating into shorts. With the price going sideways, the cumulative delta had a downward slope and was falling, which confirms the previous conclusions regarding the direction to the shorts. Cumulative Delta Volume - short.
4. Volume
Breakdown November 9, 2022 passed at a high volume. The volume is present for 2 days in a row, which confirms the truth of the breakdown. Perhaps these are stop losses, perhaps something else.
Conclusion
Initially, I planned a neutral idea in the direction, with a remark regarding the emerging trend in any direction. But having outlined the above indicators and comparing the signals from them, I created the idea of going short. Because all indicators confirm the continuation of movement in this direction. The market has natural cycles, so the cycle of price accumulation turns into a cycle of directional movement. After the spring is compressed, a sharp movement follows. Which is confirmed by the ADX indicator. The remaining indicators indicate the direction. But maybe everything is different, I am not a crypto specialist, I just applied the approach to trading crypto futures. Technically, the picture also looks in shorts. An exception may occur in case of a sharp increase in the opposite direction in the coming days. In all other cases, the downtrend will continue.
1.ADX
The ADX indicator signals the emergence of a new trend. Actually, this indicator served as a trigger to start analyzing the situation with Bitcoin. Because before starting a movement from a long and protracted flat, it is interesting to understand and figure out whether it was possible to predict the direction in advance, not for a crypto expert. ADX also shows the direction of price movement, which can be seen from the DM+ and DM- lines, and now there has been an impulse along the DM- line, which is significantly higher than the DM+ line, which indicates the presence of a short direction. ADX will go above 25% in the near future, which will mean that there is a trend in the market. ADX - short.
2. Fundamental prerequisites
According to COT reports, sales have prevailed over the past six months. Almost the entire 6-month flat was sold. The classic long situation looks different - a fall in prices and a simultaneous increase in long positions by hedgers. The Fundamental is for short.
3. Cumulative Delta Volume
An excellent indicator for determining a set of positions when in long-term consolidations. The current consolidation is very long and, as the indicator shows, the Delta was accumulating into shorts. With the price going sideways, the cumulative delta had a downward slope and was falling, which confirms the previous conclusions regarding the direction to the shorts. Cumulative Delta Volume - short.
4. Volume
Breakdown November 9, 2022 passed at a high volume. The volume is present for 2 days in a row, which confirms the truth of the breakdown. Perhaps these are stop losses, perhaps something else.
Conclusion
Initially, I planned a neutral idea in the direction, with a remark regarding the emerging trend in any direction. But having outlined the above indicators and comparing the signals from them, I created the idea of going short. Because all indicators confirm the continuation of movement in this direction. The market has natural cycles, so the cycle of price accumulation turns into a cycle of directional movement. After the spring is compressed, a sharp movement follows. Which is confirmed by the ADX indicator. The remaining indicators indicate the direction. But maybe everything is different, I am not a crypto specialist, I just applied the approach to trading crypto futures. Technically, the picture also looks in shorts. An exception may occur in case of a sharp increase in the opposite direction in the coming days. In all other cases, the downtrend will continue.