Even more Bottom Calling on Bitcoin
Updated
TLDR: This and my linked post make a very strong case for limited downside, accumulation and reversal for the next several years. Don't get stupid with margin trading.
Analysis
I use the gaussian channel to find when an asset is undervalued for chosen time frame. Bitcoin has a history of going sideways under the gaussian channel and so far has never returned to levels below the Gaussian channel when it reenters and the channel has gone from green to red. Very simply price under a red gaussian channel means accumulate. Eventually that will not be a workable strategy but so far the logic is solid.
The On Balance Volume with EMAs is a great tool to look at what is happening with volume over time. The indicator lets you set three different lookback periods and you can customize it to look for crosses to show when buy or sell pressure has shifted. I have made some mistakes with the OBV because it is hard to do some analysis on assets that are continually printing new "coins" like bitcoin does so you can't exactly use to look for divergences over large time frames.
What you can do, however, is notice when the On Balance Volume is under a long term ema, like the 100. That symbolizes a whole lot of selling pressure and it suggests that the selling is about done.
If you want to be a investor I suggest you do some tinkering with the On Balance Volume with EMAs because you can notice a a lot of things. On the chart below I have added the 150 EMA in red to the 100 EAM in green. In 2015 to 2016 the OBV was pinched between those two EMAS while the price action bottomed and made beautiful W pattern. That happened again at the low in late 2019 and early 2019. For the C19 dump the OBV lanced through and then recovered.
Right now, the OBV is below the 150 EMA. That has never happened before. This is literally one of the best buying opportunities you could ever find for bitcoin using a simple OBV strategy of buying under a long-term EMA. It is as simple as value investors looking to accumulate under the 200 week on a asset they believe has the ability to recover, or people buying the base of the monthly Bolling band or kelter channel, or buying when the RSI has fallen below 20.
And the RSI has fallen below 30, and it has done so bullishly! The RSI is lower now than it was during the dip in late 2018 but the price is currently much higher. A higher low on price but lower low on the indicator is hidden bullish divergence and it can mark great long term buying opportunities. Hidden divergences suggest price action will continue in the direction it was going when the divergence formed so in this case we would look for bullish continuation, or a higher high.
Divergence Primer
Classic Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicato
For target setting I continue to think there will be major consolidation at the 2 level and a top at the 2.618 level from the draw on the chart below. You see that rising wedge formation? Guess what, targeting suggest we will go to the wedge apex then price will spill to the beginning of the wedge and bitcoin loses almost all of its value. What a hell of a ride. My linked idea will show I have been watching for this wedge to act as support for a while. There is a chance that price falls out of the wedge now, which would be painful, but we can limit that loss with stop losses. I don't see that happening right now on account of the bullishness I articulated in this post.
There is a rising wedge on Ethereum as well.
Linked ideas
The linked ideas show a lot of bullishness in the market, whether it be ideas looking at similar indicators, or massive bullish patterns on other cryptos. and it really helps steady my hands going forward. Hopefully they will be of some use to you as well.
Analysis
I use the gaussian channel to find when an asset is undervalued for chosen time frame. Bitcoin has a history of going sideways under the gaussian channel and so far has never returned to levels below the Gaussian channel when it reenters and the channel has gone from green to red. Very simply price under a red gaussian channel means accumulate. Eventually that will not be a workable strategy but so far the logic is solid.
The On Balance Volume with EMAs is a great tool to look at what is happening with volume over time. The indicator lets you set three different lookback periods and you can customize it to look for crosses to show when buy or sell pressure has shifted. I have made some mistakes with the OBV because it is hard to do some analysis on assets that are continually printing new "coins" like bitcoin does so you can't exactly use to look for divergences over large time frames.
What you can do, however, is notice when the On Balance Volume is under a long term ema, like the 100. That symbolizes a whole lot of selling pressure and it suggests that the selling is about done.
If you want to be a investor I suggest you do some tinkering with the On Balance Volume with EMAs because you can notice a a lot of things. On the chart below I have added the 150 EMA in red to the 100 EAM in green. In 2015 to 2016 the OBV was pinched between those two EMAS while the price action bottomed and made beautiful W pattern. That happened again at the low in late 2019 and early 2019. For the C19 dump the OBV lanced through and then recovered.
Right now, the OBV is below the 150 EMA. That has never happened before. This is literally one of the best buying opportunities you could ever find for bitcoin using a simple OBV strategy of buying under a long-term EMA. It is as simple as value investors looking to accumulate under the 200 week on a asset they believe has the ability to recover, or people buying the base of the monthly Bolling band or kelter channel, or buying when the RSI has fallen below 20.
And the RSI has fallen below 30, and it has done so bullishly! The RSI is lower now than it was during the dip in late 2018 but the price is currently much higher. A higher low on price but lower low on the indicator is hidden bullish divergence and it can mark great long term buying opportunities. Hidden divergences suggest price action will continue in the direction it was going when the divergence formed so in this case we would look for bullish continuation, or a higher high.
Divergence Primer
Classic Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicato
For target setting I continue to think there will be major consolidation at the 2 level and a top at the 2.618 level from the draw on the chart below. You see that rising wedge formation? Guess what, targeting suggest we will go to the wedge apex then price will spill to the beginning of the wedge and bitcoin loses almost all of its value. What a hell of a ride. My linked idea will show I have been watching for this wedge to act as support for a while. There is a chance that price falls out of the wedge now, which would be painful, but we can limit that loss with stop losses. I don't see that happening right now on account of the bullishness I articulated in this post.
There is a rising wedge on Ethereum as well.
Linked ideas
The linked ideas show a lot of bullishness in the market, whether it be ideas looking at similar indicators, or massive bullish patterns on other cryptos. and it really helps steady my hands going forward. Hopefully they will be of some use to you as well.
Note
Just want to say that with the CPI print and volatility almost nothing unusual occurred with the price action. I have been watching for an ascending triangle for a while and so far nothing about today invalidates the draw below.
Related publications
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