This is why Bitcoin went Parabolic - Technical Analysis Prevails
"History repeats itself", as they say - especially in the case of a market as predictable, albeit volatile, as Bitcoin.
During the recent parabolic move in Bitcoin, most indicators have been screaming overbought and calling for a selloff. Despite these warnings, BTC has continued to move higher leaving most people scratching their heads and saying that technical analysis is "broken" and "doesn't work for crypto markets". What is the reason for it? Manipulation by whales? FOMO? Moon bois? Ironically, we can find the answer if we are vigilant and follow the most basic of technical teachings.
As you can see back at the beginning of the 2014 bear market, Bitcoin was in a descending pennant formation, indicated by the dotted blue line. It then broke out as expected, only to give back the entire move and continue forming new lows.
Similar to what happened in 2014, but on a larger scale, Bitcoin has been in a descending pennant formation since January 2018 - though this time the price has been "manipulated" in a way to conceal the descending pennant pattern that was forming. It's my hypothesis that BTC was artifically held up around the $6200 level during the second half of 2018, until it finally collapsed in November. This would also create "fake" resistance around the $6200 level, which would allow BTC to easily pass through it on the way back up. But I digress.
Breakout of the pennant formation around $4000 saw Bitcoin explode upwards in a parabolic move to complete the technical pattern.
So where do we go from here?
Similar to the 2014 bear market, I expect Bitcoin to give back the entire parabolic move to revisit $4000 to $4400. As you can see, the NVT indicator is screaming for a sell off and I believe it will come swiftly.
I do not know where the top is but I would say we are relatively close to it. I do NOT think Bitcoin will continue on as the 2014 bear market did to reach new lows, as we are too far into the bear market cycle.
I am not trading at the moment and awaiting further confirmation of market direction before I enter into any trades.
**WARNING - This is only speculation and does not constitute investment advice. Make trades based on your own analysis and opinions**
During the recent parabolic move in Bitcoin, most indicators have been screaming overbought and calling for a selloff. Despite these warnings, BTC has continued to move higher leaving most people scratching their heads and saying that technical analysis is "broken" and "doesn't work for crypto markets". What is the reason for it? Manipulation by whales? FOMO? Moon bois? Ironically, we can find the answer if we are vigilant and follow the most basic of technical teachings.
As you can see back at the beginning of the 2014 bear market, Bitcoin was in a descending pennant formation, indicated by the dotted blue line. It then broke out as expected, only to give back the entire move and continue forming new lows.
Similar to what happened in 2014, but on a larger scale, Bitcoin has been in a descending pennant formation since January 2018 - though this time the price has been "manipulated" in a way to conceal the descending pennant pattern that was forming. It's my hypothesis that BTC was artifically held up around the $6200 level during the second half of 2018, until it finally collapsed in November. This would also create "fake" resistance around the $6200 level, which would allow BTC to easily pass through it on the way back up. But I digress.
Breakout of the pennant formation around $4000 saw Bitcoin explode upwards in a parabolic move to complete the technical pattern.
So where do we go from here?
Similar to the 2014 bear market, I expect Bitcoin to give back the entire parabolic move to revisit $4000 to $4400. As you can see, the NVT indicator is screaming for a sell off and I believe it will come swiftly.
I do not know where the top is but I would say we are relatively close to it. I do NOT think Bitcoin will continue on as the 2014 bear market did to reach new lows, as we are too far into the bear market cycle.
I am not trading at the moment and awaiting further confirmation of market direction before I enter into any trades.
**WARNING - This is only speculation and does not constitute investment advice. Make trades based on your own analysis and opinions**