Identifying significant bottoms in Bitcoin Bear Cycles
Hey all!
I've been looking at long term charts for quite a while, trying to find some pattern to help me identify and find the dreaded "price bottom" everyone longs for.
Here's a model/pattern I've found out in the chart, which eerily seems to be accurate across past cycles, and we just yet might be finishing it off as well this time.
There are several predicates I have to put before the analysis:
This is NOT financial advice and should be used for entertainment purpose only!
I'm using two-week candles to have as little noise as possible while having more data points than when using Monthly candles.
RSI
- Major level for RSI is 50; when RSI is above 50, I consider we are in bull-market and going up. Basically every time we went above 50 and held it as support, we never looked below 50 before reaching the cycle price top.
- Another major indicator is the Moving Average on RSI. As per usual, if MA is going up, the price goes up and until the direction switches, prices will go up. Breaking the MA as support and holding it as resistance starts the new bear market and prices dropping.
- Since this analysis focuses on the "bottom", I'm going to talk mainly about what happens after RSI breaks the MA and it reaches level 50 from above.
StochRSI
- as per definition, major levels are level 20 and 80.
- All major price points I'll talk about happen below level 20.
PMAR & PMARP
- I'm using PMARP
- major level is between ~25-30; We tend to touch or go below this level in bear markets
- The Moving Average (SMA) is very important and I'll be using it in my analysis as well.
As you can see, there are 9 orange vertical lines, I call them simply "#point 1-9". These are actually describing the "same" event in different times across the Bitcoin history.
I will completely omit any price charting, the price is only pinpointing my analysis, however be sure to notice, the orange #points are showing INDICATOR significant levels, NOT price levels (even though they go hand-in-hand).
The story must be explained on each of the three indicators, for each of the three-points I'm using.
So let's start!
#point 1, 4, 7
RSI
- RSI went below MA (yellow line), and reached the ~50 level for the first time since quite a while.
- On this occasion, the level 50 holds as SUPPORT
StochRSI
- First visit of <20 lows since hitting highs of >80
- Usually goes even below 5, or as low as 0 on this occasion.
PMARP
- First time reaching level ~26-30 since breaking the MA (white line)
On this occasion, we are hitting first major lows on all indicators (and price of course as well). However, every time, there is a small bounce, but this bounce is short-lasting, invevitably heading for next points.
#point 2, 5, 8
RSI
- First time RSI does not hold 50 as support and breaks below this level. It will likely retest this level as resistance but fail to hold it as support for any prolong period of time.
StochRSI
- Another point being <20, most likely hitting <5 again.
PMARP
- Hitting level ~26-30 again or going first time BELOW it.
After our first set, we had a brief rally, only to get crushed even more below our support levels on all three indicators. Price can be the same or lower than on previous point, but we know there is #point 3/6/9 coming up, as this is not the bottom just yet...
#point 3, 6, 9
RSI
- Hits absolute bottom, it will NOT go below this level until the next bear market.
StochRSI
- Again (or still) hitting levels <20, most likely <5 even. Looks like any momentum is completely dead.
PMARP
- Hitting new lower-low, this value will not be visited again before reaching next bear market.
- #point 9 is an outlier - other points were rejected from MA after previous point AND before reaching this low, not the case for #point 9; However, what we DID have, was a rejection from MA on PMARP before #point 8 printed, which could count as well.
This last point in each cycle is very special, as there are many similarities and some differences between each points.
The most important aspect is, that at these points, the indicators were at their absolute bottoms, and very similar story followed for #points 3/6, we are yet to see if they will happen for #point 9 as well.
So what happens next?
RSI
- In my eyes, the bull-market is over whenever RSI goes below 50. And on the contrary, the bear market is over when RSI goes above 50 and decisively holds it as support.
- When last point prints, the RSI must retake firstly the MA (which tends to be lower than 50), and next it must go above 50. Once it does, the bull market is officially on.
- You can notice interesting "similar" timeframes for following:
- Going below MA (yellow line), and going above 50 level took 45 bars (Jan 2014 - Oct 2015), and 35 bars (Dec 2017 - Apr 2019). If we take 45 bars on our current cycle, we are looking at Mar 2021 - Dec 2022 if you take first break of MA (the same as previous points)
- After going above level 50 (and holding it as support), it took 57 bars before we decisively broke the MA in 2017/18 bull-market, and 51 bars in 2019-2021 bull market. Since we are not above level 50 right now, it's hard to say when the next RSI break might be, but if we use our previous estimate of 45 bars from MA break to 50 level break, and use "average" of 51 and 57 bars, we are pointing for RSI breaking the MA from above again in Jan 2025; but this is pure speculation right now.
StochRSI
- Important level when coming from <20 is of course the level 20, and 40 as well. Once both levels are held as support (and possibly retested more times), the bull market might just be allowed to start,
- For #point 3/6, the first time we "touched" level 20 on StochRSI after these points printed, we never went below level 20 again until the next bear market.
- NOTE: Reaching 80 the first time does NOT have to mean the bull market is starting - this has to be connected with the RSI being above 50 as well - then you can be "sure" it won't go down again until next bear market.
PMARP
- Similarly to RSI, PMARP has two objectives - retake MA (white line), hold it as support and then go above level ~26-30 and hold that as support.
- There are also similar timeframes for notable objectives done by PMARP:
- Breaking the MA (white line) from ABOVE, to break it again from BELOW took 28 and 29 bars. If it were to take 29 bars this time "again", it points to Dec 2022 (same as RSI using 45 bars, see above) - the last point is a bit of an outlier, since PMARP went above it's MA briefly during Oct 2021, so I consider the "last" break from ABOVE in this timeframe.
- Time between #point 3 and 6, when PMARP last touched the MA, to next time it did the same after given point was reached, took 100 bars. If we use this same timeframe, we are looking to break the MA on PMARP from BELOW in Dec 2022 (again the same date!)
To summarize:
- All things considered, I think we've already found our "three bottoms" as we did have in previous bear markets as well. This does NOT mean price cannot go lower (cascading liquidations for example), but I'd argue that the INDICATOR bottoms are IN!
- Using similar timeframes, it might seem we could break the indicator major resistance around Dec 2022. This does not mean the price will be higher then than it is now!
- Again, I'm not saying price bottom has been reached.
- Critique and comments are welcome. I'm newb TA-junkie, this is not professional work and it's the first Idea I've written.
- This is not financial advice, DYOR.
I've been looking at long term charts for quite a while, trying to find some pattern to help me identify and find the dreaded "price bottom" everyone longs for.
Here's a model/pattern I've found out in the chart, which eerily seems to be accurate across past cycles, and we just yet might be finishing it off as well this time.
There are several predicates I have to put before the analysis:
This is NOT financial advice and should be used for entertainment purpose only!
I'm using two-week candles to have as little noise as possible while having more data points than when using Monthly candles.
RSI
- Major level for RSI is 50; when RSI is above 50, I consider we are in bull-market and going up. Basically every time we went above 50 and held it as support, we never looked below 50 before reaching the cycle price top.
- Another major indicator is the Moving Average on RSI. As per usual, if MA is going up, the price goes up and until the direction switches, prices will go up. Breaking the MA as support and holding it as resistance starts the new bear market and prices dropping.
- Since this analysis focuses on the "bottom", I'm going to talk mainly about what happens after RSI breaks the MA and it reaches level 50 from above.
StochRSI
- as per definition, major levels are level 20 and 80.
- All major price points I'll talk about happen below level 20.
PMAR & PMARP
- I'm using PMARP
- major level is between ~25-30; We tend to touch or go below this level in bear markets
- The Moving Average (SMA) is very important and I'll be using it in my analysis as well.
As you can see, there are 9 orange vertical lines, I call them simply "#point 1-9". These are actually describing the "same" event in different times across the Bitcoin history.
I will completely omit any price charting, the price is only pinpointing my analysis, however be sure to notice, the orange #points are showing INDICATOR significant levels, NOT price levels (even though they go hand-in-hand).
The story must be explained on each of the three indicators, for each of the three-points I'm using.
So let's start!
#point 1, 4, 7
RSI
- RSI went below MA (yellow line), and reached the ~50 level for the first time since quite a while.
- On this occasion, the level 50 holds as SUPPORT
StochRSI
- First visit of <20 lows since hitting highs of >80
- Usually goes even below 5, or as low as 0 on this occasion.
PMARP
- First time reaching level ~26-30 since breaking the MA (white line)
On this occasion, we are hitting first major lows on all indicators (and price of course as well). However, every time, there is a small bounce, but this bounce is short-lasting, invevitably heading for next points.
#point 2, 5, 8
RSI
- First time RSI does not hold 50 as support and breaks below this level. It will likely retest this level as resistance but fail to hold it as support for any prolong period of time.
StochRSI
- Another point being <20, most likely hitting <5 again.
PMARP
- Hitting level ~26-30 again or going first time BELOW it.
After our first set, we had a brief rally, only to get crushed even more below our support levels on all three indicators. Price can be the same or lower than on previous point, but we know there is #point 3/6/9 coming up, as this is not the bottom just yet...
#point 3, 6, 9
RSI
- Hits absolute bottom, it will NOT go below this level until the next bear market.
StochRSI
- Again (or still) hitting levels <20, most likely <5 even. Looks like any momentum is completely dead.
PMARP
- Hitting new lower-low, this value will not be visited again before reaching next bear market.
- #point 9 is an outlier - other points were rejected from MA after previous point AND before reaching this low, not the case for #point 9; However, what we DID have, was a rejection from MA on PMARP before #point 8 printed, which could count as well.
This last point in each cycle is very special, as there are many similarities and some differences between each points.
The most important aspect is, that at these points, the indicators were at their absolute bottoms, and very similar story followed for #points 3/6, we are yet to see if they will happen for #point 9 as well.
So what happens next?
RSI
- In my eyes, the bull-market is over whenever RSI goes below 50. And on the contrary, the bear market is over when RSI goes above 50 and decisively holds it as support.
- When last point prints, the RSI must retake firstly the MA (which tends to be lower than 50), and next it must go above 50. Once it does, the bull market is officially on.
- You can notice interesting "similar" timeframes for following:
- Going below MA (yellow line), and going above 50 level took 45 bars (Jan 2014 - Oct 2015), and 35 bars (Dec 2017 - Apr 2019). If we take 45 bars on our current cycle, we are looking at Mar 2021 - Dec 2022 if you take first break of MA (the same as previous points)
- After going above level 50 (and holding it as support), it took 57 bars before we decisively broke the MA in 2017/18 bull-market, and 51 bars in 2019-2021 bull market. Since we are not above level 50 right now, it's hard to say when the next RSI break might be, but if we use our previous estimate of 45 bars from MA break to 50 level break, and use "average" of 51 and 57 bars, we are pointing for RSI breaking the MA from above again in Jan 2025; but this is pure speculation right now.
StochRSI
- Important level when coming from <20 is of course the level 20, and 40 as well. Once both levels are held as support (and possibly retested more times), the bull market might just be allowed to start,
- For #point 3/6, the first time we "touched" level 20 on StochRSI after these points printed, we never went below level 20 again until the next bear market.
- NOTE: Reaching 80 the first time does NOT have to mean the bull market is starting - this has to be connected with the RSI being above 50 as well - then you can be "sure" it won't go down again until next bear market.
PMARP
- Similarly to RSI, PMARP has two objectives - retake MA (white line), hold it as support and then go above level ~26-30 and hold that as support.
- There are also similar timeframes for notable objectives done by PMARP:
- Breaking the MA (white line) from ABOVE, to break it again from BELOW took 28 and 29 bars. If it were to take 29 bars this time "again", it points to Dec 2022 (same as RSI using 45 bars, see above) - the last point is a bit of an outlier, since PMARP went above it's MA briefly during Oct 2021, so I consider the "last" break from ABOVE in this timeframe.
- Time between #point 3 and 6, when PMARP last touched the MA, to next time it did the same after given point was reached, took 100 bars. If we use this same timeframe, we are looking to break the MA on PMARP from BELOW in Dec 2022 (again the same date!)
To summarize:
- All things considered, I think we've already found our "three bottoms" as we did have in previous bear markets as well. This does NOT mean price cannot go lower (cascading liquidations for example), but I'd argue that the INDICATOR bottoms are IN!
- Using similar timeframes, it might seem we could break the indicator major resistance around Dec 2022. This does not mean the price will be higher then than it is now!
- Again, I'm not saying price bottom has been reached.
- Critique and comments are welcome. I'm newb TA-junkie, this is not professional work and it's the first Idea I've written.
- This is not financial advice, DYOR.
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