Comparing indicators from different bitcoin bear markets
Updated
TLDR: Indicator similarities suggest a strong buy for accumulators.
Introduction
Price actions causes indicator action and so you can see patterns on indicators stemming from price action. As price action tightens you can see different indicators tighten as well. Most tightening actions on charts is formed by triangles or wedges and as this idea will show, there has been tightening on the MACD Histogram and RSI.
Discussion
The MACD Histogram (on standard settings) tracks the distance between the 12 and 26 EMAs. A high positive value means the 12 is high above the 26, a 0 means the EMAs have crossed and a high negative value means the 12 is far below the 26. For the MACD histogram to tighten as it did in the 2018 to 2020 chart and the current chart that means the EMAS have been less volatile because price has been less volatile on the indicator.
Of course the price action has been consistently bearish. There is no way for the gaussian channel to turn from green to red on such a high time frame without that downward price action. But just as narrowing price action suggest energy is getting coiled up prior to a release likewise a tightening MACD histogram suggests a large move is brewing
The RSI provides us with some more information. In the last bear market the tightening on the RSI was mostly sideways which is why it was drawn as a triangle. We don't currently see the RSI going sideways, it is in a falling wedge. This falling wedge suggests that the RSI will ultimately break to the upside with price action. The fact that RSI hit oversold and is under a red gaussian channel is very promising for an upside move as well. It is also comforting for the bulls that the RSI is lower with price at about 19,800 than it was when the wedge began to form at support point 1 in august 2020 than it it is now. The RSI is even lower than during thr Covid dump. This higher low on price but lower low on an indicator is a clear example of hidden bullish divergence. Hidden divergences are my favorite kind of divergences and it is particularly comforting to see them with the RSI at oversold, below a red gaussian channel with a very tight MACD Histogram.
There is a lot more stuff going on with the price action but I don't want to make this a post where I throw "Everything but the kitchen sink" at this idea but I will mention some things. Mr. Bollinger, creator of the Bollinger Bands has pointed out that the price is resting on the monthly BB for the first time in bitcoins history. Followers of the NVT are looking at how undervalued bitcoin is compared to the value transactions on the network. Price is below the weekly Keltner channel which has been a historically great place to buy. Lots of "OG" coins like Dash and BCH are nailing in a higher low on multi-year W patterns. ETHBTC has found support on the 200 EMA and is now fighting resistance at 100 EMA and I think that it will beat that resistance.
It appears that this has been a very technical sell off until we retested the all time high on Bitcoin and Eth and now this horizontal retest has been complete are premier cryptos are primed to have their new highs and then a real and proper multi year beak market. As an example of horizontal retests see silver and golds retest below, which happened in the 2008 financial crisis.
Should price begin to move up taking profit before the 1.618 level seems to be weak handed based on what we can see happened with silver and gold.
My Trades
I have taken longs in ethe, dash, bch and trx. I like the older coins because I think targeting on them is easier than the newer coins and the can offer me enough gains that I will be happy with the outcome of the trades. But I think they will still be correlated with BTC so I have to watch BTC. I also see this move happening over the next 2-3 years due to how long the W patterns will need to play out on Dash, BCH and other "OG" coins. I mentioned Dash on a differnt forum and was pleased to hear so many people considered the project dead, just like many people are saying bitcoin is dead. That is a sign to me that these coins will be in the stealth phase for a while.
My linked ideas go deeper into my rational and my trades.
Introduction
Price actions causes indicator action and so you can see patterns on indicators stemming from price action. As price action tightens you can see different indicators tighten as well. Most tightening actions on charts is formed by triangles or wedges and as this idea will show, there has been tightening on the MACD Histogram and RSI.
Discussion
The MACD Histogram (on standard settings) tracks the distance between the 12 and 26 EMAs. A high positive value means the 12 is high above the 26, a 0 means the EMAs have crossed and a high negative value means the 12 is far below the 26. For the MACD histogram to tighten as it did in the 2018 to 2020 chart and the current chart that means the EMAS have been less volatile because price has been less volatile on the indicator.
Of course the price action has been consistently bearish. There is no way for the gaussian channel to turn from green to red on such a high time frame without that downward price action. But just as narrowing price action suggest energy is getting coiled up prior to a release likewise a tightening MACD histogram suggests a large move is brewing
The RSI provides us with some more information. In the last bear market the tightening on the RSI was mostly sideways which is why it was drawn as a triangle. We don't currently see the RSI going sideways, it is in a falling wedge. This falling wedge suggests that the RSI will ultimately break to the upside with price action. The fact that RSI hit oversold and is under a red gaussian channel is very promising for an upside move as well. It is also comforting for the bulls that the RSI is lower with price at about 19,800 than it was when the wedge began to form at support point 1 in august 2020 than it it is now. The RSI is even lower than during thr Covid dump. This higher low on price but lower low on an indicator is a clear example of hidden bullish divergence. Hidden divergences are my favorite kind of divergences and it is particularly comforting to see them with the RSI at oversold, below a red gaussian channel with a very tight MACD Histogram.
There is a lot more stuff going on with the price action but I don't want to make this a post where I throw "Everything but the kitchen sink" at this idea but I will mention some things. Mr. Bollinger, creator of the Bollinger Bands has pointed out that the price is resting on the monthly BB for the first time in bitcoins history. Followers of the NVT are looking at how undervalued bitcoin is compared to the value transactions on the network. Price is below the weekly Keltner channel which has been a historically great place to buy. Lots of "OG" coins like Dash and BCH are nailing in a higher low on multi-year W patterns. ETHBTC has found support on the 200 EMA and is now fighting resistance at 100 EMA and I think that it will beat that resistance.
It appears that this has been a very technical sell off until we retested the all time high on Bitcoin and Eth and now this horizontal retest has been complete are premier cryptos are primed to have their new highs and then a real and proper multi year beak market. As an example of horizontal retests see silver and golds retest below, which happened in the 2008 financial crisis.
Should price begin to move up taking profit before the 1.618 level seems to be weak handed based on what we can see happened with silver and gold.
My Trades
I have taken longs in ethe, dash, bch and trx. I like the older coins because I think targeting on them is easier than the newer coins and the can offer me enough gains that I will be happy with the outcome of the trades. But I think they will still be correlated with BTC so I have to watch BTC. I also see this move happening over the next 2-3 years due to how long the W patterns will need to play out on Dash, BCH and other "OG" coins. I mentioned Dash on a differnt forum and was pleased to hear so many people considered the project dead, just like many people are saying bitcoin is dead. That is a sign to me that these coins will be in the stealth phase for a while.
My linked ideas go deeper into my rational and my trades.
Note
If you hit the play button on the main chart you can see price action has just gone up on a weekly basis since my original post. Since the indicators don't update when you do that please referene the chart below.The MACD histogram is approaching zero and the RSUI has swung up nicely. I suspect the histogram will be green in the next week or so and the RSI will be working it sway upward to 70 or higher. I do expect some drama when price action gets to the gaussian channel but so far that is "meh" to me. I have done a good job loading on the alt(s) I prefer and culled some I didn't to get ready for the next bull run. I suspect bitcoin will pop above the guassian channel and consolidate and when it turns green that will be a very good long term signal for a bull market.
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