Well ladies and gents...
I have had this conversation many times already with my "normie" or "nocoiner" friends over the last few days... and after TEN. YEARS. You'd think they'd listen to what I say at this point...
You'd think... But no.
I have been vocal about it in person and on my Facebook page... where my suggestion that the $BTC ETF approval was actually going to be a TOP signal... rather than a Bullish one... was met with incredulity... as usual 😐
I was hoping my experience and my weekly local meet-up for "Bitcoin & Brews" would help... alas... it does not.
With that being said, BTC is moving downward (and dragging the Alts with it)...
But how far will it go? How far does it sink before catching support and rebounding... Knowing the answer to THAT question could help one set buying opportunities...
If you have ever seen the TA Wizards at work, you'd think they had a Crystal Ball or something... with the predictions they make and the certainty with which they make them
However, in my experience - Technical Analysis (TA) is more about probability than providing "precise answers"...
There are many, many types of TA and an INCREDIBLE amount of tools at the Chart Sorcerers disposal...
Today we are going to look at a few:
Support and Resistance Levels - my earlier article covers what these are!
RSI: Relative Strength Index
The "Fibonacci Retracement" - aka Wizardry
Those are the tools I am going to use today to make a guesstimate as to where I think a "bottom"... MIGHT be.
Again, as with all other posts I make - I am not suggesting you DO anything with my observations and guesses... If you choose to buy or sell or hold or whatever... that's on you. This is NOT "Financial Advice" 👿
I am going to show you how I use the three tools above if you want to try it out on your own!
Before we get to the Chart - I highly, HIGHLY recommend going back to the link I added earlier... My "Intro to Chart Reading" post.
If you don't know how to read a chart - the following post will be a mess and incomprehensible to you.
If you take the time to read my looooong ass post about Reading Charts... it covers pretty much all the basics and definitely enough to understand the first two tools on the list.
The third tool... The Fibonacci Retracement, is a new one for you and it is just short of Magic for getting a rough idea of where things tend to turn around...
Ok, ok, enough pretense!! let's look at the chart already!!
Starting with #1 - Support and Resistance Levels: If you look at the Chart, you can see Bull Market on the left side and you can see 4 Horizontal Lines spanning the chart from left to right.
These lines aren't chosen at random, they are placed where the priced stopped moving in one direction and reversed... or stayed tight to a small range, not moving up/down for periods of time.
The 4 Support/Resistance Levels are, from top to bottom:
RED: $51,831
PURPLE: $45,629
GREEN: $36,203
WHITE: $31,531
Now look - I don't think those are EXACT Price points where things will turn around but when I chart I lay out these lines across price points with multiple reversals or "grindy bits" as I call them...
I think of this a rough estimate for a small range of Support or Resistance...
What I mean by that is I may lay my line at $31,531 for example... but I don't expect that to be THEE number... it could be $30,750 or $32,497 and that's close enough for me, when I look at it.
Ok... so you've seen the four Color Coded S/R Levels... But we didn't hit the RED one... yup... didn't have the momentum for it.
In fact we didn't even "Close" above the PURPLE Resistance Level of $45,629 in this Chart because it is a Weekly Timeframe and the current Candle isn't done!
With that being said... Lets look back at the chart, this time at the lower part, where we can see the Relative Strength Index or "RSI".
What is RSI you may be wondering... The RSI is a handy little tool that ranges from 0-100 with a Purple-ish "Belt" through the middle 40%.
If this indicator is Above 70% you start entering what they call "Overbought" Territory... this means the valuation for the current Stock/Crypto/Commod etc... is pretty HIGH and is probably going to stop moving upwards because it has undergone significant upward movement already... and the investors may start taking profits (selling it), causing the price to stop moving upward and even reverse...
The further over 70 you get... the more likely the reversal, or at least the stop of the upward movement...
The same is true in reverse! If the RSI is UNDER 30... They call that "Oversold" meaning investors have been selling or shorting, causing the price to drop over a time period and based on the amount of the drop and the time frame... this may indicate people are going to start thinking
"Hey... this is a good deal... I should buy some of this"
But wait Jimbo... are you saying that Charts and TA can PREDICT what people are THINKING... No... Not exactly...
The best description I ever heard about charts was this: "All a chart is, is human emotion and psychology printed on a graph."
With that being said - if a stock was $10/share and after a few months it was $2/share... People might start to think something like:
"Hey that company didn't go under... they seem to be making a comeback... Their stock used to be $10... $2 seems like A DEAL... Maybe I should BUY IT and I hope it goes back up to $10... but even $4 is DOUBLING MY MONEY!!!"... or something like that.
The RSI measures THAT, in essence.
So... What on Earth is a Fibonacci Retracement!? Simply put - Magic.
No but really... You should go to Tradingview and play around with it on ANY STOCK OR CRYPTO YOU WANT... Go test it out!!
This "Magic" I speak of, is that human psychology tends to tread closely to the famed mathematician's Fibonacci Sequence.
There are THREE "Standard" Fibonacci Percentages used when calculating a "Retracement".
First - what the hell is a "Reatracement". It's super simple actually!!
Observe my Caveman example:
Price go up from 1 to 101...
Price go up 100 units.
Price stop going up at 101 and come back down to 61.
Price RETRACE from 101 to 61... or -40 and in this case -40 of 100 = -40%
You see, so simple even a caveman can do it!
Let's see the chart again:
You start your Fibonacci Retracement at the START of the INCREASE (or decrease)...
In this case I picked $15,604, for my start, on the left side of the "Magic Rainbow Box"...
The top, on the top right of said "Magic Rainbow Box" = $49,007 which was close enough to the top of the latest candle for my level of precision...
So starting from the TOP of the "Magic Rainbow Box" and going lower, you can see "Levels" marked off by color coded lines... These are the "Fibonacci Retracement Levels" and represent POSSIBLE areas where Price Movement changes...
All based on Human Psychology... Shit's wild yo. But seriously... Go test it for yourself 😳
The KEY levels I look at are the "Standard Levels" of 38.2%, 50% and 61.8% (please note that 38.2 + 61.8 = 100!)
One last look at the chart to see those levels again...
WAIT WHAT THE FUCK 👀👀👀👀👀
Did the 38.2% Level LINE THE FUCK UP WITH THE $36,200 Level I laid out in my PREVIOUS POST?????
Yes. It. Did. I TOLD YOU IT WAS WIZARDRY!!
Now look, don't pee your pants or anything - just because it lines up... doesn't mean it WILL do that... it just means it COULD do that...
The more of these predictions that line up using multiple tools... the more confidence I have accuracy of that prediction.
Going down to the 50% Fib Retracement we see $32,300 which is PRETTY DAMN CLOSE to the White support line at $31,531!!!!
Finally the 61.8% Fib Retracement is $28,364 and LOOK AT THAT... It falls on the LOCAL S/R levels ANNNNNNNNNNNND... if you were around a few years ago... The Battle for $28k was INTENSE... Thus a VERY STRONG S/R LEVEL!!
HOLY SHITBISCUITS IT LOOKS LIKE FREAKING SORCERY!! ARE WE IN THE MATRIX????
At this point - shit I dunno anymore 🤷♂
Thank you for joining me, that's all I have today!! I hope you found it informative and I will do my best to post another one tomorrow!! Depending on whether or not I make a Splinterlands post, that may use my free writing time for the day... But I promise, I will definitely be back!!
This post and none of my other posts are financial advice. I am not telling anyone to purchase/hold/sell or invest in any asset. What you do with your own money is up to you... my posts are just my observations and opinions!
If you liked it: please follow me and reblog for visibility!!
I appreciate the support and it definitely encourages me to share more of these along with my experience - an entire DECADE of it, in the Crypto world!
Please let me know what you think, any charts or topics you'd like to see and how I can improve in the comments below!
I look forward to reading them and if you decide to follow me, please say so in the comments so I can follow you back 😄
Cheers 🍻,
- CaptainDingus
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