Bitcoin: Building the long term analysis into the next ATH
There are a number of different ways of using technical analysis. One way of using TA is to formulate a concrete trading plan upon which one can base actual trading decisions. I use TA to find certain (rule based) trade setups, and wait for price to give me either a confirmation of that setup to enter the trade, or an invalidation to cancel the setup and re-evaluate the situation.
Another way of using TA is creating a larger context of movement and relevant price levels (and time areas!). This is not something to base trades on, but as I said the context which one can use to make sense of the market. It is a more exploratory way of looking at the market, extrapolating patterns of the past into the future
This analysis is the latter, looking at the price of Bitcoin since 2011, and examining the patterns that have emerged. That brings me to the caveat of this analysis: we only have 9 years of data to use...
The Chart
There’s a number of different things going on on this chart. Let’s break them down one by on.
I’ll start with the three trend lines supporting the past bull markets ((1), (2) and (3). They all start at the bottom (end of the correction/bear market), and touch at the point from where the market starts its parabolic move. The lines do not have to be precise, and depending on which points you choose the angle will vary, but that’s not a problem here. I’m not looking for precision, but for the big picture.
What can we notice?
First, when the trend line breaks to the downside after the price goes parabolic it does not break to the upside after that. Trend line (1) and (2) are clearly broken to the downside, but price never reaches them after that. The question is, will that be true for trend line (3) as well? Well, that’s hard to say. If price breaks through and moves sufficiently away from the trend line as it did in the previous cases, I’m fairly confident that trend line (3) will become a ceiling price will never reach again. For that reason this is a trend line I will keep on my charts and watch in the future.
If this holds to be true, it implies that there is a point in time before which we won’t reach an ATH: the crossing of the trend line and the price at the last all time high (4). This happens at the end of June 2020. This means that only after this point price will be able to reach new highs.
Second, when we look at the previous intersections of the trend lines with the previous highs ((5) and (6)), we can also see something interesting. At the intersection of trend line (1) with the previous high (5), price seems to be accelerating into the parabolic move that follows. At the intersection of trend line (2) with the previous all time high (6) we can see the same thing, price starts moving into the bull market. Perhaps the intersection point (4) will also see some kind of acceleration of price. This is good enough for me to make it an area of interest which I will watch.
To recap: according to this analysis Bitcoin won’t reach new all time highs before the end of June 2020, and the actual all time high will probably come long after that date. Around the end of June Bitcoin may have a price acceleration to the upside, signalling the start of the next parabolic move.
Will this actually unfold in this way? I have no idea, and neither does anyone else for that matter. There’s only 9 years of data to base this analysis on, 1 bear market and 3 bull markets. So this has to be taken as a purely exploratory framework in which to view price movements. Every new candle is new information, and many things can happen that will cause me to rethink this analysis. For instance the situation we’re in now is crucial. In the previous trend line breaks you will notice that the trend lines (1) and (2) offer no support what so ever. Price breaks through those trend lines without any trouble.. Price is at the current trend line (3) now, watching how it behaves around this this line the coming weeks will be crucial. It’s possible that this trend line will hold as support (I don’t think its likely though..), and if that happens, I will have to re-evaluate this analysis, because that has not happened before. So it’s something to keep an eye on..
Now that we have the distant future figured out, what about the more immediate situation? When and where is the bottom? The simple yet often forgotten truth? Nobody knows. But I can look at previously relevant price areas, and see if there’s any information there.
Let’s start with the “where”. As we’re breaking the trend line we’re also breaking the first support level (7) of around 5000. If we get a clean break through here the next area of support (8) is around the 3000 area. If that doesn;t hold, we;re looking at retesting the previous “all time high” at around 1200 (9). in the previous bear market, the previous ATH was never tested, which gives me reason to favour the 3000 area (8) as the bottom of this bear market. However, like I said before and will keep on stressing, this is not a prediction, but an exploration. When price gets to the levels of interest, I will watch price reaction and the indicators to assess the situation in more detail.
Now then, “when”? This a bit more tricky, as much will depend on how price reacts and it’s hard to predict how price will react in 4 months time. However, there is some precedent. After trend line (1) and (2) broke to the downside, we can see that the market bottomed out fairly quickly. When price broke down trend line (1), it formed a bottom a few months later, followed by a reversal into a the next bull market. When price broke down trend line (2), it bottomed in the following weeks. Price moved sideways for about six months, before the new bull market started.
In both cases the bottom followed the break of the trend line quite rapidly, and that’s what I expect here too.
It’s possible that the trend line (3) will cause a slight bounce upwards before actually breaking, we’ll have to wait and see. But when the trend line breaks, I expect the bottom (be it at (8) or (9)) to follow within a few months, if not a few weeks. That all depends on when, and how exactly the trend line breaks.
I want to once more mention that this is in no way a prediction of how the future will unfold, but a framework which gives me price areas and time areas which may be of relevance.
Again, every candle is new information to base decisions on. We’ll have to wait and see what the markets reaction is, and take it from there!
If you enjoy these setups and analysis please like and subscribe so more people can join you :)
If you want to try our indicator out, follow us and drop a comment or pm and we’ll get you set up.
More information on our indicator can be found below:
Stay calm, and happy trading!
Another way of using TA is creating a larger context of movement and relevant price levels (and time areas!). This is not something to base trades on, but as I said the context which one can use to make sense of the market. It is a more exploratory way of looking at the market, extrapolating patterns of the past into the future
This analysis is the latter, looking at the price of Bitcoin since 2011, and examining the patterns that have emerged. That brings me to the caveat of this analysis: we only have 9 years of data to use...
The Chart
There’s a number of different things going on on this chart. Let’s break them down one by on.
I’ll start with the three trend lines supporting the past bull markets ((1), (2) and (3). They all start at the bottom (end of the correction/bear market), and touch at the point from where the market starts its parabolic move. The lines do not have to be precise, and depending on which points you choose the angle will vary, but that’s not a problem here. I’m not looking for precision, but for the big picture.
What can we notice?
First, when the trend line breaks to the downside after the price goes parabolic it does not break to the upside after that. Trend line (1) and (2) are clearly broken to the downside, but price never reaches them after that. The question is, will that be true for trend line (3) as well? Well, that’s hard to say. If price breaks through and moves sufficiently away from the trend line as it did in the previous cases, I’m fairly confident that trend line (3) will become a ceiling price will never reach again. For that reason this is a trend line I will keep on my charts and watch in the future.
If this holds to be true, it implies that there is a point in time before which we won’t reach an ATH: the crossing of the trend line and the price at the last all time high (4). This happens at the end of June 2020. This means that only after this point price will be able to reach new highs.
Second, when we look at the previous intersections of the trend lines with the previous highs ((5) and (6)), we can also see something interesting. At the intersection of trend line (1) with the previous high (5), price seems to be accelerating into the parabolic move that follows. At the intersection of trend line (2) with the previous all time high (6) we can see the same thing, price starts moving into the bull market. Perhaps the intersection point (4) will also see some kind of acceleration of price. This is good enough for me to make it an area of interest which I will watch.
To recap: according to this analysis Bitcoin won’t reach new all time highs before the end of June 2020, and the actual all time high will probably come long after that date. Around the end of June Bitcoin may have a price acceleration to the upside, signalling the start of the next parabolic move.
Will this actually unfold in this way? I have no idea, and neither does anyone else for that matter. There’s only 9 years of data to base this analysis on, 1 bear market and 3 bull markets. So this has to be taken as a purely exploratory framework in which to view price movements. Every new candle is new information, and many things can happen that will cause me to rethink this analysis. For instance the situation we’re in now is crucial. In the previous trend line breaks you will notice that the trend lines (1) and (2) offer no support what so ever. Price breaks through those trend lines without any trouble.. Price is at the current trend line (3) now, watching how it behaves around this this line the coming weeks will be crucial. It’s possible that this trend line will hold as support (I don’t think its likely though..), and if that happens, I will have to re-evaluate this analysis, because that has not happened before. So it’s something to keep an eye on..
Now that we have the distant future figured out, what about the more immediate situation? When and where is the bottom? The simple yet often forgotten truth? Nobody knows. But I can look at previously relevant price areas, and see if there’s any information there.
Let’s start with the “where”. As we’re breaking the trend line we’re also breaking the first support level (7) of around 5000. If we get a clean break through here the next area of support (8) is around the 3000 area. If that doesn;t hold, we;re looking at retesting the previous “all time high” at around 1200 (9). in the previous bear market, the previous ATH was never tested, which gives me reason to favour the 3000 area (8) as the bottom of this bear market. However, like I said before and will keep on stressing, this is not a prediction, but an exploration. When price gets to the levels of interest, I will watch price reaction and the indicators to assess the situation in more detail.
Now then, “when”? This a bit more tricky, as much will depend on how price reacts and it’s hard to predict how price will react in 4 months time. However, there is some precedent. After trend line (1) and (2) broke to the downside, we can see that the market bottomed out fairly quickly. When price broke down trend line (1), it formed a bottom a few months later, followed by a reversal into a the next bull market. When price broke down trend line (2), it bottomed in the following weeks. Price moved sideways for about six months, before the new bull market started.
In both cases the bottom followed the break of the trend line quite rapidly, and that’s what I expect here too.
It’s possible that the trend line (3) will cause a slight bounce upwards before actually breaking, we’ll have to wait and see. But when the trend line breaks, I expect the bottom (be it at (8) or (9)) to follow within a few months, if not a few weeks. That all depends on when, and how exactly the trend line breaks.
I want to once more mention that this is in no way a prediction of how the future will unfold, but a framework which gives me price areas and time areas which may be of relevance.
Again, every candle is new information to base decisions on. We’ll have to wait and see what the markets reaction is, and take it from there!
If you enjoy these setups and analysis please like and subscribe so more people can join you :)
If you want to try our indicator out, follow us and drop a comment or pm and we’ll get you set up.
More information on our indicator can be found below:
Stay calm, and happy trading!
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