So, we are at a critical retracement level (61.8%,) while simultaneously testing a critical moving average (weekly 50 ,) after being rejected at lateral overhead resistance (5500,) but above some newly found support (lead in .) Taking all of that into consideration, I have come to the conclusion that I must do my own assessment of this bump and run reversal theory, to see if it sway's my view. Because currently, from a pure probability standpoint, I do believe that there is a much higher chance that we fall from here, as opposed to the probability that Bitcoin continues to rally. With that said, perhaps the bump and run reversal argument has merit (anything is possible.) Regardless, if we did move higher, the upside would likely be very limited. You can see that the weekly 50 MA (in red) is falling toward price action, just above the weekly 50 . So, if BTC broke out higher, it would have to contend with that, and then the ultimate between 5777 and slightly above 6000 (in red.) With that said, I am still cautiously sitting on the sidelines, after taking profits from my long that I've added to since December.
Looking at the , we can see that it is pegged on 100, and has been there since the beginning of March. Additionally, the daily just came off of near record overbought territory, and the daily is also showing signs of exhaustion, after printing a crossover a few days ago.
Recently, I saw the argument that has been circulating around the internet regarding the bump and run bottoming setup for Bitcoin . While I do think that the bottom is in, I'm not too sure about the bump and run reversal theory. So, let's take a look at the chart in depth, to see how that theory stacks up with the technical requirements necessary to produce a bump and run reversal.
1. Lead in Trendline: "If it's too steep, then the ensuing bump is unlikely to be significant enough. If the is not steep enough, then the subsequent will occur too late. Bulkowski advises that an angle of 30 to 45 degrees is preferable." Our lead in is -23°.
This is below the "preferable" range.
2. Bump Phase: "Ideally, the angle of the from the bump's advance should be about 50% greater than the angle of the extending up from the lead-in phase. Roughly speaking, this would call for an angle between 45 and 60 degrees." Our bump phase is -54°.
This is in line with the required angle.
3. Bump Validation: "The distance from the lowest low of the bump to the lead-in should be at least twice the distance from the lowest low in the lead-in phase to the lead-in . These distances can be measured by drawing a vertical line from the highest highs to the lead-in ."
Distance of lowest low of bump to lead in: 3008
Distance of lowest low of lead in to lead in: 2185.
So, 3008 is not "at least twice" the distance of 2185. Therefore, the bump was not validated.
4. Bump Rollover: Clearly we saw a bump rollover when price rose from the lows.
5. Volume: The progression looks consistent with that of the bump and run reversal requirements.
6. Run Phase: "The run phase begins when the pattern breaks support from the lead-in ... Once the break occurs, the run phase takes over, and the rally continues."
According to this description, we are in the "run phase."
7. Resistance Turns Support: "After the is broken, there is sometimes a retracement that tests the newfound . Potential resistance-turned-support levels can also be identified from the reaction highs within the bump."
So, based on this, we could see price return to the lead in , to test it for support. That could also be near the highs formed during the bump phase.
In summary, this is not a perfect textbook bump and run reversal pattern. I think it does help to confirm that the bottom is in. However, I still think the overhead resistance is too great to be broken right now, and the indicators show clear exhaustion. Therefore, we should expect price to return to the lead in , to test it for support as the theory suggests. That is what I think is the most likely scenario. From there, I think Bitcoin will progressively become more .
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
There are probably a handful of knowledgeable and experienced enough traders on here which you can learn from. Most of TV is the pits. Poop is one of the worst - a serial abuser and misunderstander of vital basics combined with emotional hype and a truck of BS to tie it all together.