It was great to see Bitcoin's price to jump above 20k once again. It was equally a welcome trend change for rest of the crypto market as well. Hive is going up, LTC going up, Ether going up, etc. Obvious question in everybody's mind is "Is this the beginning of the bull market?" As usual opinions differ. Some claim this is short term trend change, others claim it is time for crypto prices to rise again. When it comes to market prices nobody really knows. Nobody is correct all the time either. It is all guessing game.
Hash Ribbons Indicator created by Capriole Charles on TradingView, triggered a 'Buy' signal today. It is rare for this indicator to print a 'Buy' signal, and this signal has been more reliable in the past compared to other publicly indicators. Although there was a recent time when it failed as well.
Charts and indicators are commonly used tools by traders and investors. While everybody uses different platforms, apps, charts and indicators as part of their trading strategies, the data used is same. All indicators use a different ways of calculating the same data that charts display - open, high, low, close, volume. In a sense various chart patterns and indicators serve as a self-fulfilling prophecies, because many participants of the markets are making their trading decisions based on the same price feed data.
After this weeks Bitcoin price action many indicators triggered a buy signals. It is kind of obvious to make such calls after decent rise in price and reclaiming a significant price point and staying above 20k. One of the potential reasons for enthusiasm in the markets and sudden rise of bitcoin and crypto prices can the recent news about inflation, that it may be slowing down. Just like indicators, this is another way of guessing the direction of markets. Regardless what the reasons might be, market participants will continue to make sense of various situations and associate some rational reasoning behind price moves.
There are many who do not use any indicators. I personally find indicators interesting. None of them work all the time. But if some do work some of the time, this might just be enough to gain some edge. Another reasons I like indicators is because of platforms like TradingView that allows users to write their own scripts and experiment with community built indicators.
Hash Ribbons indicator is an open source script written by Capriole Charles on TradingView. To see the explanations by the author and see the full code visit Hash Ribbons by Capriole on TradingView. The author of the indicator also provides the full code for review and experimenting with. It is available for free. There are other Hash Ribbons indicators on TradingView as well. If you are going to try this indicator, make sure you are choosing the one by Capriole Charles.
Normally, indicators use various calculations on price values like open, close, high, low of the given asset. Sometimes we also see volume values being used as well. What makes Hash Ribbons a unique indicator is, it is specific for Bitcoin and it uses hash rate values.
On the screenshot above you can see at the top section the Bitcoin price chart, and at the bottom section the Hash Ribbon indicator. It has some green and yellow lines, and different color circles at the top of the indicator.
Forget about everything else, and only look at the Blue Circles with a "Buy" written under them. To understand what everything else does, or if you even would need them, you can review the code and explanations by Capriole Charles. But for the purposes of this post, let's only look at the Blue Circles. Here is how author explains them:
The "blue" circle is the first instance of positive momentum following recovery of Hash Rate (1m HR > 2m HR). This is historically a rewarding place to buy with limited downside.
You can see from the screenshot above that when Blue Circles appeared price of Bitcoin did go up, sometimes slowly, sometimes right away. The screenshot above is showing the weekly chart. We can use daily or other timeframes. The blue circles will appear on the same date regardless the timeframe.
The indicator can be used on different timeframes like daily, weekly or monthly. The higher is the timeframe, the more reliable are the signals, in my opinion. As I already mentioned there was a time when this indicator failed as well, and it was one of the recent one on a daily chart. If you change your chart view to daily timeframe, you will notice that there was a "Buy" signal on August 19, 2022. That day bitcoin's price actually had a significant drop from 23k to below 21k. Since then it hasn't reclaimed 23k yet. However, if we look at the weekly or monthly timeframe, we can see Hash Ribbons "Buy" signal did turn out to be a correct prediction of the price direction.
While charts, historical patterns, and indicators can be interesting and serve as tools to read what happened in the past and help us guess the future price action, they remain to be guessing gaming. There are always unknowns, and it is easy to lose real money in the markets. No one trading strategy fits alls.
It is pleasant surprise to see bitcoin and hive prices going up for a change. I personally do no expect any significant price movements this year, maybe even next year. But 2025 is probably going to be the year bitcoin will make new all time highs. I will happy to be wrong and see new all time highs sooner. Keeping expectations low is better than having high expectations and being disappointed.
Have you used Hash Ribbons indicator? Let me know your thoughts in the comments.