BTCUSD - Sheer Parabolic Madness. End Near?Personally, I've never participated in a parabolic move like this. As a student of Volatility Theory, my desire here is to analyze this move in shotgun marriage style with what limited information obtained about parabolic curves.
Admittedly, a few previous posts were not taken seriously by myself. In an effort to ameliorate and elaborate the analysis, I'd like to bring in a few notable points from Volatility Theory that leans on the usage Bollinger Bands and Distribution sets for a more tempered assessment of this absurd experience and moment in time.
Just the points though. If you'd like to learn about Volatility Theory, I'll post a link below. Great group of folks there and on SharkCharts.live. Special thanks for all the ideas floating around from the insightful minds there - especially DadShark, ACATwithcharts, and the many members.
Quick Legend :
BB = Bollinger Bands
StdDev = Standard Deviation
LOXP = Longest OverExpanded Period
Notable Points :
The origins of this parabolic move can be traced back to December (though it was unrevealed at that point for obvious reasons)
Price Action moved inside the 50 Weekly Distribution Set (350 BB on the Daily)
The present LOXP on the Daily is 70 and it's clearly trending above that after this 4th base
Moves like these seem to have 4 bases of contact on the arc/curve which appear satisfied in this analysis
What information I have found through simple search suggests that this post 4th move could be the last neck of this leg.
The top of this move is not yet known, so the parallel channel here is a projection
The top of the parallel channel has been generously assigned to the 1.25 StdDev Upper Band of the 50 Weekly Moving Average
The angle of the curve seems to direct itself quite nicely to the Upper Band of the 50 Weekly Bands @ 1.25 StdDev
There is a heavy order block in the same area that would constitute a top, though likely only mildly important with this euphoric move
A break of the channel 'mean' could be a good indication that this move is coming to an end
Projected and evidence based retrace from moves like these are anywhere from 62% - 79%, and have heard 50% retrace is a bit lower of a probability yet not out of the question.
The Daily LOXP Mean (70 @ 1.25 StdDev) is going to be traveling up to meet price, which may place it in the 50 - 62% area before all is said and done.
The 50 Weekly Moving Average is also starting to settle right around that 50% retrace value
Price generally trades to the mean (which it has already done) and laterally as defined by the same distribution set once it breaks inside, as it has here - (a break inside is a crossing of the 1.25 StdDev of the 50 Weekly BB or any distribution set for that matter).
Is it unlikely that we break the 50 Weekly 1.25 Upper Band? I think, no. It's entirely possible. I think for this trend to continue on a healthy path, a correction inside this 50 Weekly Band is probable and necessary.
This smaller distribution set has turned into a much larger distribution set, which is equivalent to turning off the road. The road does not go this way, as the upper slope of probability is downwards, not upwards (Mark Whistlers analogy, "Why do retail traders attempt to turn off the road with trading") - meaning, we're slightly against the grain here.
Again, I'm merely a student of the charts. If you know something about parabolic moves, please share. This idea is as wild as this price action but it has been quite an experience.
Good luck traders, may you find yourself on the profitable side of it!
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Reading: Mark Whistler - Volatility Illuminated
