After two months of regression and FUD creating wide-spread bearish sentiment, Bitcoin (BTC) is currently experiencing a breakout providing relief to bullish investors in the crypto space. Does this mean the beginning of another bullish wave? Or this is simply the dead cat bounce we never received two months ago?
My answer is "neither." In fact, going back two months ago to my look at a budding re-accumulation zone, this recent push up by Bitcoin is nothing but a sign of support at some key levels that'll help crypto investors to build positions for perhaps the remainder of the calendar year.
First, let's address my previous idea. At that time, BTC was closing out its second of two very nasty red candles. Bitcoin dropped from 58.3K to 34.8K in just two weeks, with wicks extending further to a 30-60K range. By all means, this was a clear sign of regressive liquidations and capitulation -- or what we like to colloquially call a "crash." Blood on the streets, my friends. However, I noted the January 24 close of $32288.56 as the lower bound of a re-accumulation zone that I expected to hold for the foreseeable future (at least until key levels were broken). Reasons for this belief included: a double bottom with the Jan 24 close, a weekly RSI trying to hold at 50, daily oversell regression, a BTC bottom's multiplied returns relative to once-removed ATHs (re: this bottom vs the ATH from Dec 2017), repeating bull cycles theory (re: this cycle vs the 2013 double-top cycle) and the expanding cycles theory. Besides the weekly RSI experiencing bearish crossover, everything else proved to be valid and relevant reasoning behind the establishment of this lower bound to a long-term re-accumulation zone (re: between the Jan 24 close and Apr 12 open, as seen in blue).
Fast forward to tonight, when we saw a weekly candle close over 35K after opening slightly below the re-accumulation zone lower bound. This confirms a bounce off the re-accumulation zone support line. Not that it happened without some anxiety -- the early-week price movement was negative, with Bitcoin briefly dropping below 30K and moving out of the neutral market support zone (re: between the 50w EMA and 52w SMA, as seen in purple). However, the bulls came back to prove why smart traders should wait until the confirmation of a candle before making moves, as Bitcoin went from possibly breaking down into a bearish price zone to experiencing its highest weekly price percentage increase since the end of April. Better yet, the chart shows a bullish engulfing candle, which often shows evidence of a reversal in the market. Bulls clearly seem happy at this development, given the early-week gains so far on the present candle, which is show to be approximately 3K (in fewer than three hours) at the time of publish.
So why am I not claiming this means we're heading to a bullish breakout? Well, I strongly believe we still have many hurdles to clear, particularly that of the bull market resistance zone (re: between the 20w EMA and 21w SMA, as seen in green). That zone not only turned from support to resistance rather easily during the two-week crash, but it expanded as it began trending downward. In fact, until this last weekly close, the bull market resistance zone seemed destined to head its way below the neutral market support zone. If this happens, it would result in a "death cross" that may have a much larger impact than the cross of the 50d SMA and 200d SMA. (We already experienced capitulation before that "death cross," so I didn't sweat that cross. Both moving averages were purely lagging indicators in that instance.) A strong green candle occurring this week as well would definitely slow down the rate of convergence between the purple and green zones, which would be a positive indicator for impatient bulls looking to earn a quick return of their BTC entries.
Until BTC can break above the green zone, we won't be able to assess the validity of a return to the bull market. And that can't happen until at least the weekly RSI crosses back over 50, something which requires this week to close somewhere in the 39-41K range or higher. But for now, at least we've seen the blue and purple zones hold as resistance. At that means there's still no need to panic from a long-term holder's standpoint.
I offer no financial advice, but I do think this chart is worth eyeing to look for re-accumulation positions. Good luck, and happy trading!
My answer is "neither." In fact, going back two months ago to my look at a budding re-accumulation zone, this recent push up by Bitcoin is nothing but a sign of support at some key levels that'll help crypto investors to build positions for perhaps the remainder of the calendar year.
First, let's address my previous idea. At that time, BTC was closing out its second of two very nasty red candles. Bitcoin dropped from 58.3K to 34.8K in just two weeks, with wicks extending further to a 30-60K range. By all means, this was a clear sign of regressive liquidations and capitulation -- or what we like to colloquially call a "crash." Blood on the streets, my friends. However, I noted the January 24 close of $32288.56 as the lower bound of a re-accumulation zone that I expected to hold for the foreseeable future (at least until key levels were broken). Reasons for this belief included: a double bottom with the Jan 24 close, a weekly RSI trying to hold at 50, daily oversell regression, a BTC bottom's multiplied returns relative to once-removed ATHs (re: this bottom vs the ATH from Dec 2017), repeating bull cycles theory (re: this cycle vs the 2013 double-top cycle) and the expanding cycles theory. Besides the weekly RSI experiencing bearish crossover, everything else proved to be valid and relevant reasoning behind the establishment of this lower bound to a long-term re-accumulation zone (re: between the Jan 24 close and Apr 12 open, as seen in blue).
Fast forward to tonight, when we saw a weekly candle close over 35K after opening slightly below the re-accumulation zone lower bound. This confirms a bounce off the re-accumulation zone support line. Not that it happened without some anxiety -- the early-week price movement was negative, with Bitcoin briefly dropping below 30K and moving out of the neutral market support zone (re: between the 50w EMA and 52w SMA, as seen in purple). However, the bulls came back to prove why smart traders should wait until the confirmation of a candle before making moves, as Bitcoin went from possibly breaking down into a bearish price zone to experiencing its highest weekly price percentage increase since the end of April. Better yet, the chart shows a bullish engulfing candle, which often shows evidence of a reversal in the market. Bulls clearly seem happy at this development, given the early-week gains so far on the present candle, which is show to be approximately 3K (in fewer than three hours) at the time of publish.
So why am I not claiming this means we're heading to a bullish breakout? Well, I strongly believe we still have many hurdles to clear, particularly that of the bull market resistance zone (re: between the 20w EMA and 21w SMA, as seen in green). That zone not only turned from support to resistance rather easily during the two-week crash, but it expanded as it began trending downward. In fact, until this last weekly close, the bull market resistance zone seemed destined to head its way below the neutral market support zone. If this happens, it would result in a "death cross" that may have a much larger impact than the cross of the 50d SMA and 200d SMA. (We already experienced capitulation before that "death cross," so I didn't sweat that cross. Both moving averages were purely lagging indicators in that instance.) A strong green candle occurring this week as well would definitely slow down the rate of convergence between the purple and green zones, which would be a positive indicator for impatient bulls looking to earn a quick return of their BTC entries.
Until BTC can break above the green zone, we won't be able to assess the validity of a return to the bull market. And that can't happen until at least the weekly RSI crosses back over 50, something which requires this week to close somewhere in the 39-41K range or higher. But for now, at least we've seen the blue and purple zones hold as resistance. At that means there's still no need to panic from a long-term holder's standpoint.
I offer no financial advice, but I do think this chart is worth eyeing to look for re-accumulation positions. Good luck, and happy trading!
Comment:
UPDATE: Weekly close on Aug 8
Bitcoin experiences another green week... and set up at the *other* boundary of the bull market resistance zone entering this new week. The weekly open is at $43829.15 to be within a 1% margin of error of the present-week 21w MA (approximately $43800 at the time of publish). This sets up a week that could be very important to establish the timeframe for the best bull wave.
We must not get ahead of ourselves, though. If this week finishes in the red, it could either set up a convergence period between the green and purple zones at around 35-40K... or it could lead us out of the re-accumulation zone and into a bear market.
As it's been for basically the past two months, we are in a learning period to figure out when BTC is set to get truly rolling again. In the mean time, it is nice to see the past three green candles essentially make up for the massive red candle that brought us out of the green zone and into the bottom of the re-accumulation zone.
Bitcoin experiences another green week... and set up at the *other* boundary of the bull market resistance zone entering this new week. The weekly open is at $43829.15 to be within a 1% margin of error of the present-week 21w MA (approximately $43800 at the time of publish). This sets up a week that could be very important to establish the timeframe for the best bull wave.
We must not get ahead of ourselves, though. If this week finishes in the red, it could either set up a convergence period between the green and purple zones at around 35-40K... or it could lead us out of the re-accumulation zone and into a bear market.
As it's been for basically the past two months, we are in a learning period to figure out when BTC is set to get truly rolling again. In the mean time, it is nice to see the past three green candles essentially make up for the massive red candle that brought us out of the green zone and into the bottom of the re-accumulation zone.
Comment:
UPDATE: Weekly closes on Aug 15 and 22
The bullish happenings continue. First, the August 15 green candle confirms a flip of the bull market resistance zone to a support zone. Next, the August 22 green candle fends off a wick back to the 21w SMA, only to finish a new local high.
Now, at the time of this update (early overnight hours, EST, of Aug 23), BTC has surpassed 50K.
A looming crossover of the 20w EMA and 21w SMA seems all but certain by the end of next week as September begins -- unless the bears come out to play en masse. As long as this crossover happens, we'd be making the next step towards confirmation of a returned bull market run.
The final step of confirmation would be BTC falling back to the bull market support zone, only for the zone to hold as support. That may still need some time, but we can definitely afford it. The Bollinger band seems content tightening up -- and any squeeze there could make for ripe rip to new highs. As it stands now, a 2-3 month time period seems fair for a bullish pressure build-up.
To be honest, EVERYTHING seems to be going according to plan, following this idea and the idea from May. Of course, it's crypto, so you never know...
I'll update next with a new idea when bullish confirmation gets tested. Until then, happy trading!
The bullish happenings continue. First, the August 15 green candle confirms a flip of the bull market resistance zone to a support zone. Next, the August 22 green candle fends off a wick back to the 21w SMA, only to finish a new local high.
Now, at the time of this update (early overnight hours, EST, of Aug 23), BTC has surpassed 50K.
A looming crossover of the 20w EMA and 21w SMA seems all but certain by the end of next week as September begins -- unless the bears come out to play en masse. As long as this crossover happens, we'd be making the next step towards confirmation of a returned bull market run.
The final step of confirmation would be BTC falling back to the bull market support zone, only for the zone to hold as support. That may still need some time, but we can definitely afford it. The Bollinger band seems content tightening up -- and any squeeze there could make for ripe rip to new highs. As it stands now, a 2-3 month time period seems fair for a bullish pressure build-up.
To be honest, EVERYTHING seems to be going according to plan, following this idea and the idea from May. Of course, it's crypto, so you never know...
I'll update next with a new idea when bullish confirmation gets tested. Until then, happy trading!
Bitcoin closes right at the lower bound of the bull market resistance zone, finishing a strong green week at $39865.41, vs the 20w EMA of $39470.72. Although technically inside of the zone, the price difference just sneaks within a 1% margin of error ($394.69 vs $394.7072), so I'd consider it a proper designation that the close was AT the 20w EMA. This sets up an important week for BTC when it comes to establishing continued upside... or a possible return to the purple and blue resistance lines.
Note that the neutral market support zone has crossed inside my re-accumulation zone, which is a positive sign supporting this idea's narrative. However, it also means that the re-accumulation zone would have no more lines of defense supporting it if it cannot hold another test of the lower bound.
Additionally, we see a weekly close that began pinching the bull market resistance zone, as well as the continued pinching of the neutral market support zone. Why is this important? Because right now, BTC projects to have bullish crossover (20w EMA vs 21w SMA) and bearish crossover (52w SMA vs 50w EMA) within the next 5-8 weeks. This would be an unprecedent mixed signal for Bitcoin, so clearly the price action of the next few weeks will determine which crossover actually happens.
The most bullish scenario is that this week's price closes in the green, with the bull market resistance zone getting pierced. That could expedite the bullish crossover while allowing BTC to possible reestablish the green zone as support. On the flip, the most bearish scenario is that week's price closes in the red, with a revisit to the neutral market support zone. That could expedite the bearish crossover while possibly threaten that support entirely. If see a crossover of both indicator and price -- like we saw with the green during the May 16 close -- it could be the beginning of an extended legitimate bear market, a la June 2018 to April 2019.
I'll reiterate that there's no reason right now to panic from a long-term holder's standpoint, but I certainly feel more convinced that the upcoming weeks will be most telling about BTC's near future.