BTC - History repeats itself - analysis of recent trading cycles
Since December, BTC has been going through cycles that can fit with several different analyses (e.g., the use of bear flags to illustrate periods of decreases followed by increases along a trendline to the next decrease - it could also be examined using wave analysis). The following analysis is used to illustrate the similarity of these patterns and examine evidence for continued drops and a reversal.
As you can see, the black line following the first drop for BTC has been closely followed on the second drop (also shown in black). Especially relative to the lows established following a drop, then rapid increase to resistance, followed by smaller increases and decreases to the edge of the channel - then the next drop.
If we look at the blue pattern, that is still the same path created from the first drop, but it is now shrunk in terms of magnitude and time scale. It is still currently a very good fit for the price movement we are seeing now, which leaves the question, what happens after this cycle completes.
The two black trendlines visible are established based on long term lows in the past and suggest 2 interpretations. If you believe BTC has reached the bottom of this bear run, then the blue data path will be the last drop and at some point it will diverge from this cycle (blue) and head up. If you are less convinced the bottom is in, then look at the red data path which is still identical to the original black data path but compressed further.
However, evidence from RSI and MACD history, suggest there may still be further to go with these cycles, because highs and lows have been converging on a point ending towards the end of February. If you believe there is another cycle, it may look like the red data path. If BTC enters this cycle, then it will place the price at an even longer term trend line that should result in even stronger support and aligns better with the RSI and MACD patterns. This pattern also seems to align well with projections from a harmonic analysis, suggesting the overall increase last year and decrease more recently will complete towards the end of February.
Interesting how the collective patterns of so many traders can repeat their trading patterns on these compressing cycles (i.e., shorter time spans and decreased price ranges). It presents an interesting case for the next several days and a test of these trading patterns.
There are no specific trading recommendations here, because this is an educational post focused on repeating trading patterns. It will take time to see if history repeats itself . . . again.
As you can see, the black line following the first drop for BTC has been closely followed on the second drop (also shown in black). Especially relative to the lows established following a drop, then rapid increase to resistance, followed by smaller increases and decreases to the edge of the channel - then the next drop.
If we look at the blue pattern, that is still the same path created from the first drop, but it is now shrunk in terms of magnitude and time scale. It is still currently a very good fit for the price movement we are seeing now, which leaves the question, what happens after this cycle completes.
The two black trendlines visible are established based on long term lows in the past and suggest 2 interpretations. If you believe BTC has reached the bottom of this bear run, then the blue data path will be the last drop and at some point it will diverge from this cycle (blue) and head up. If you are less convinced the bottom is in, then look at the red data path which is still identical to the original black data path but compressed further.
However, evidence from RSI and MACD history, suggest there may still be further to go with these cycles, because highs and lows have been converging on a point ending towards the end of February. If you believe there is another cycle, it may look like the red data path. If BTC enters this cycle, then it will place the price at an even longer term trend line that should result in even stronger support and aligns better with the RSI and MACD patterns. This pattern also seems to align well with projections from a harmonic analysis, suggesting the overall increase last year and decrease more recently will complete towards the end of February.
Interesting how the collective patterns of so many traders can repeat their trading patterns on these compressing cycles (i.e., shorter time spans and decreased price ranges). It presents an interesting case for the next several days and a test of these trading patterns.
There are no specific trading recommendations here, because this is an educational post focused on repeating trading patterns. It will take time to see if history repeats itself . . . again.
Kommentera:
Price appears to be coming down - following the pattern observed twice before. If this downturn continues, BTC may find a local bottom somewhere in the area of 6000. At that point, if it follows the previous patterns, it may increase again for the short term.