I've been told that I haven't updated my TA enough lately. I'll preface this by saying that if you scroll back over the past few months, this is playing out as I more/less predicted, so I've been a little slower to update. Basically from November thru January we were looking for evidence of a floor, and towards the end of January we saw more and more bullish divergences piling up. Now thats not to say I'm a permabull, or that I guaranteed this would happen and think we will rocket to $100k.. it just means given the evidence, it indicated a rally was more likely than other outcomes.
Now.. and this is important- it could signal a "dead cat" as some like to call a failed rally. The market was approaching a very bearish oversold state which means we were due for a recovery. Dead cats are not unheard of, basically after a period of correction bulls attempt to rally the price but bearish sentiment is too overpowering and the rally fails, dropping again.
BUT if you go back to my older posts from a couple months ago, we talk about measuring the length of bear and bull cycles according to the bearish and bullish inversion of the 202 SMA and 21w EMA.
In there we found a fairly consistent drawdown averaging 17% shorter cycles and if this pattern continued, we would see a bullish inversion of those MAs, but since they are lagging indicators, it means we would need to see a bullish rally begin in January>February .. (you can read this all above at that message link).
Okay so Papi you called a floor and the start of a rally, you are a certifiable genius.. but whats next?
Glad you asked. So now I want to see the follow thru. We are already seeing some good signs- Google Trends indicate that searches against Bitcoin are approaching bull market levels, we are seeing a continued uptrend on the weekly chart, we see supply continue to tick down, we see a possible decoupling between traditional equity markets and Bitcoin/crypto, and a lot of other on-chain data shows bullish sentiment rising.
Basically we need to see all of that continue.
The easiest way to track it, of course, is simply watching the price action. If we start to see major weakness in charts, large red candles or we lose key support levels, then this might prove a failed rally. But until then, bulls are on a journey to reclaim key supports and see how far they can lift the price.
I marked some key support levels on this chart (look on the right at the price column).. this is not comprehensive, but gives you a frame of reference on higher timeframes.
On the weekly bulls need to hold $39.7k where the 12h 20 EMA sits alongside a key support. The next HTF resistance level I'm watching is around $44k, but locally we have a short term resistance around $42.7k.
In any case, after months of downtrend, I think a rally is not out of the question, and even expected- but the question is how strong of a rally, and will macroeconomics permit a proper rally or will it get stomped out early?
On a related note, you'll see the US Dollar Index (DXY) rejected from a HTF resistance level, and this Bitcoin rally strongly coincides (as usual) with a dump of DXY. But I'll post tomorrow an even spicier tidbit about the BTC and DXY relationship.. until then, trade safe, use your stoploss.
Now.. and this is important- it could signal a "dead cat" as some like to call a failed rally. The market was approaching a very bearish oversold state which means we were due for a recovery. Dead cats are not unheard of, basically after a period of correction bulls attempt to rally the price but bearish sentiment is too overpowering and the rally fails, dropping again.
BUT if you go back to my older posts from a couple months ago, we talk about measuring the length of bear and bull cycles according to the bearish and bullish inversion of the 202 SMA and 21w EMA.
In there we found a fairly consistent drawdown averaging 17% shorter cycles and if this pattern continued, we would see a bullish inversion of those MAs, but since they are lagging indicators, it means we would need to see a bullish rally begin in January>February .. (you can read this all above at that message link).
Okay so Papi you called a floor and the start of a rally, you are a certifiable genius.. but whats next?
Glad you asked. So now I want to see the follow thru. We are already seeing some good signs- Google Trends indicate that searches against Bitcoin are approaching bull market levels, we are seeing a continued uptrend on the weekly chart, we see supply continue to tick down, we see a possible decoupling between traditional equity markets and Bitcoin/crypto, and a lot of other on-chain data shows bullish sentiment rising.
Basically we need to see all of that continue.
The easiest way to track it, of course, is simply watching the price action. If we start to see major weakness in charts, large red candles or we lose key support levels, then this might prove a failed rally. But until then, bulls are on a journey to reclaim key supports and see how far they can lift the price.
I marked some key support levels on this chart (look on the right at the price column).. this is not comprehensive, but gives you a frame of reference on higher timeframes.
On the weekly bulls need to hold $39.7k where the 12h 20 EMA sits alongside a key support. The next HTF resistance level I'm watching is around $44k, but locally we have a short term resistance around $42.7k.
In any case, after months of downtrend, I think a rally is not out of the question, and even expected- but the question is how strong of a rally, and will macroeconomics permit a proper rally or will it get stomped out early?
On a related note, you'll see the US Dollar Index (DXY) rejected from a HTF resistance level, and this Bitcoin rally strongly coincides (as usual) with a dump of DXY. But I'll post tomorrow an even spicier tidbit about the BTC and DXY relationship.. until then, trade safe, use your stoploss.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.