Cycle Top Indicator [CTI] | Deep Dive Analysis
In this post we will look at some of the long-term trends identified with the tracking of the CTI indicator (Red and Green Moving averages in the price chart), and what we can learn from the observed behaviors over Cycle 1 / 2 / 3 and possible implications for Cycle 4.
INDICATOR RECAP
The CTI indicator attempts to model the cycle top based on observed historic price over extension from Cycle 1 / 2. Indicator marks a cycle top when the 'Fast MA' (Red Line) crosses above the 'Slow MA' (Green Line). I.e. the condition where both MAs price value is equal. I should be noted that this condition was achieve for every cycle to date so far, and that the condition was met twice for the experienced 'double peak top' in Cycle 1 but was only met for the first of the two peak tops during Cycle 3.
OSCILLATOR: % DISTANCE MODELLED BETWEEN SLOW (GREEN MA) & FAST (RED MA) – NORMALISED TO PRICE
The below oscillator models the %Distance away from each other the Green Line and the Red line gets over BTC's cycles (Normalised to Price).
* RED HORIZONTAL LINE: When the oscillator is equal to 1, this models the price value of the Green and Red moving averages as equal (or the CTI cycle top condition)
* ORANGE HORIZONTAL LINE(s): These mark the maximum over extension the Red MA exceeded the Green MA during a cycle top condition.
* GREEN HORIZONTAL LINE(s): These mark low levels of the oscillator, indicator maximum distance of the Red MA below the Green MA during each cycle.
BLACK SLOPING TREND LINE(s): Represent the diminishing trend of overlap between the Green and Red Mas each cycle.
* VERTICAL RED AND GREEN LINES: Show cycle tops and bottoms as triggered by the CTI and CBI (Cycle Bottom Indicators) – NOTE: CBI moving averages not shown.
SIGNIFICANCE OF ORANGE HORIZONTAL & BLACK TREND LINES
It is observable that each peak of the Oscillator is lower than the previous cycle peak (each peak is marked with an Orange horizontal line). This diminishing trend is shown with each orange line marked lower than the line before, and modeled with the Black downward sloping trend line(s) connecting the peaks.
A reminder that the Red Horizontal line shows the condition with the CTI models the cycle top and conditions above the Red Horizontal line show the % distance the Red MA reaches above the Green MA each cycle. For example:
* Cycle 1 Peak = 1.58
* Cycle 2 First peak = 1.25
* Cycle 2 Second peak = 1.20
* Cycle 3 First peak = 1.07
The diminishing trend of this relationship over each cycle (if historic behavior continues) suggest that the CTI overlap condition for cycle 4 my not eventuate. This would be modeled by our oscillator not exceeding the red line in Cycle 4.
The learnings for this analysis could suggest that waiting for the CTI indicator to Fire may result in a non-event for Cycle 4.
SIGNIFICANCE OF GREEN HORIZONTAL LINES
A surprising finding from this analysis show for all cycles to date that when the modeled oscillator reaches levels between -1.11 and -1.82 and particularly for Cycles 2 / 3 & 4 between -1.50 & -1.82 (Red MA % distance below the Grean MA), Historically BTC has found its cycle bottom. These findings are summarized below for quick reference.
* CYCLE 1-4 Bottom Oscillator Condition: -1.11 <> -1.82
* CYCLE 2-4 Bottom Oscillator Condition: -1.50 <> -1.82
Feel free to include any other observations I may have missed in the comments below. i intend to do a similar analysis for the CBI indicator when I find the time.
INDICATOR RECAP
The CTI indicator attempts to model the cycle top based on observed historic price over extension from Cycle 1 / 2. Indicator marks a cycle top when the 'Fast MA' (Red Line) crosses above the 'Slow MA' (Green Line). I.e. the condition where both MAs price value is equal. I should be noted that this condition was achieve for every cycle to date so far, and that the condition was met twice for the experienced 'double peak top' in Cycle 1 but was only met for the first of the two peak tops during Cycle 3.
OSCILLATOR: % DISTANCE MODELLED BETWEEN SLOW (GREEN MA) & FAST (RED MA) – NORMALISED TO PRICE
The below oscillator models the %Distance away from each other the Green Line and the Red line gets over BTC's cycles (Normalised to Price).
* RED HORIZONTAL LINE: When the oscillator is equal to 1, this models the price value of the Green and Red moving averages as equal (or the CTI cycle top condition)
* ORANGE HORIZONTAL LINE(s): These mark the maximum over extension the Red MA exceeded the Green MA during a cycle top condition.
* GREEN HORIZONTAL LINE(s): These mark low levels of the oscillator, indicator maximum distance of the Red MA below the Green MA during each cycle.
BLACK SLOPING TREND LINE(s): Represent the diminishing trend of overlap between the Green and Red Mas each cycle.
* VERTICAL RED AND GREEN LINES: Show cycle tops and bottoms as triggered by the CTI and CBI (Cycle Bottom Indicators) – NOTE: CBI moving averages not shown.
SIGNIFICANCE OF ORANGE HORIZONTAL & BLACK TREND LINES
It is observable that each peak of the Oscillator is lower than the previous cycle peak (each peak is marked with an Orange horizontal line). This diminishing trend is shown with each orange line marked lower than the line before, and modeled with the Black downward sloping trend line(s) connecting the peaks.
A reminder that the Red Horizontal line shows the condition with the CTI models the cycle top and conditions above the Red Horizontal line show the % distance the Red MA reaches above the Green MA each cycle. For example:
* Cycle 1 Peak = 1.58
* Cycle 2 First peak = 1.25
* Cycle 2 Second peak = 1.20
* Cycle 3 First peak = 1.07
The diminishing trend of this relationship over each cycle (if historic behavior continues) suggest that the CTI overlap condition for cycle 4 my not eventuate. This would be modeled by our oscillator not exceeding the red line in Cycle 4.
The learnings for this analysis could suggest that waiting for the CTI indicator to Fire may result in a non-event for Cycle 4.
SIGNIFICANCE OF GREEN HORIZONTAL LINES
A surprising finding from this analysis show for all cycles to date that when the modeled oscillator reaches levels between -1.11 and -1.82 and particularly for Cycles 2 / 3 & 4 between -1.50 & -1.82 (Red MA % distance below the Grean MA), Historically BTC has found its cycle bottom. These findings are summarized below for quick reference.
* CYCLE 1-4 Bottom Oscillator Condition: -1.11 <> -1.82
* CYCLE 2-4 Bottom Oscillator Condition: -1.50 <> -1.82
Feel free to include any other observations I may have missed in the comments below. i intend to do a similar analysis for the CBI indicator when I find the time.
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