BTC has been correcting for four months following peak in 2018. This has not been very pleasant period for BTC investors for sure and everyone is trying to figure out what's next. There are plenty of technicians out there providing daily analysis and longer-term predictions, some bullish some bearish. BTC is at a point where both bullish and bearish scenarios could play out.
The best information that enables technical analysis of markets is the price history. Market price history likes to repeat itself which provides the basis for various frameworks, whether it's candles, patterns, trend lines, moving averages etc. etc. Price likes to move in fractals on all levels.
If you look at the events from the last BTC peak in 2014 you can spot some similarities to the situation we see in BTC today, summarised in the picture below. Similarly to 2014, we have just seen the crossing of 50 and 200 day averages called the 'death cross'. RSI indicator on daily has dropped to very low, bearish level territory. Finally, MACD remains oversold, witch the histogram on an uptick. These three things are very similar to May of 2014.
What followed these conditions in 2014 was a correction to the upside first, that could have been seen as the 'end' of the bear market. However, the trend has soon resumed to the bearish trend and then went sideways for few months.
IF the history was to repeat itself then we might be up for a short-term bounce soon. The daily RSI and MACD are supporting this scenario. This will provide some relief however I would be cautious before calling it the end of the down trend. Look at weekly MACD and you will see that the downtrend is still in full swing.
This reminds me of one of the key tenets from Jesse Livermore's book, called 'Reminiscences of a Stock Operator'. In that book he said: 'the price will always follow the path of least resistance'. This means that the price will trend in the direction that has the least number of obstacles. We have few of those obstacles ahead right now that BTC would have to bulldozer through if it was to resume the uptrend. They are:
- the downsloping resistance line created by rejection at: $19690, $17210, $11613
- 200 day moving average
- the old support line formed in July and September 2017 that now acts as resistance
So quite a few obstacles there.
On the support level side we have:
- support at $6533, currently being tested now
then
- support at $4487
- support at $3099
So, in my opinion, the path of least resistance currently is not up. This is quite scary. I know. I'm an investor too. I hate it right now however I am increasingly annoyed by popular technicians on Youtube, Twitter and Steemit that are blatantly posting bullish scenarios - you know who they are!!
I think the most optimistic scenario would be for the price to go sideways...but again, that would mean breaking through those key resistance levels.
I don't think that anybody doubts that this trend will turn around eventually and will go to higher highs, so if you bought above current price level, your best strategy, if you're not a trader, is to wait it out - HODLL!!
If you are an active participant and you bought below the current price, you still have time to protect your profits in my opinion and this is where I'm really pissed off with the technicians with many followers.
Here is the climax of this post: I am convinced that 80% of popular technicians knew exactly what we were into once the correction began back in December. Yet, up till today you hear them calling on for bull scenarios...Thousands of people that follow these people have seen their money evaporating. Yet they just sat there posting on bullish predictions. This is a big eye opener and the harsh truth. Please do not think that by following these people you will gain anything. They will just take you where the market will take you. They won't provide you enough information to allow an informed decision about your investment, even if they know it. Why?
All markets operate on the basis of a competition - we're all competing against each other, this is how it works, this is the nature of this game! I appreciate it now. You will have to as well, otherwise you will just provide liquidity to those that do. If you want to effectively manage your investment, you will have to either learn yourself or pay someone you can trust to provide you with this information.
Best of luck out there! Crypto is future!!!
Legal Disclaimer: I am not a financial advisor nor is any content in this article presented as financial advice. The information provided in this blog post and any other posts that I make and any accompanying material is for informational purposes only. It should not be considered financial or investment advice. I do not take any responsibility for how you choose to apply this information.