Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! In front of you, I have two daily charts of Bitcoin. The chart on the left is the current BTC chart, while the chart on the right depicts Bitcoin's progression through early 2015, where the last bear market ended. Today, we're going to compare the similarities of the price movements, from the final days of the last bear market to today, to try to understand what could be developing in today's market. Moreover, reviewing the 2015 market action, will give us some insight into the potential dangers if the market deviates strongly from 2015's general trajectory.
So, on the chart to the right, you can see that in 2015, Bitcoin fell to the bottom of a downtrend channel (Low.) From there, we rallied toward the middle of the channel, and the 50 EMA resistance. That produced a right shoulder, in a descending head and shoulders pattern. Then, we can see that the quasi head and shoulders pattern did not break down. Instead, support was found on the bottom of the triangle (in blue) and price then rallied — managing to close above the 50 EMA. Speaking of the 2015 triangle, I realize that I could have drawn the top trendline a little differently (catching the candle wicks.) However, I wanted to connect the relevant start of the pattern, to fully illustrate the similarities. Keep in mind that technical analysis is not always bound by tight rules and restrictions. You have to be fluid with your analysis, when the time is right, without being unjustifiably biased. In this situation, there is a clear similarity. Liquidity and market participation were much different in 2015, when compared to today. So, a slight shift in the similarities can be excused. Now then, after the quasi head and shoulders pattern of 2015 had completed itself, we saw a two day pause, followed by a rally that took Bitcoin above the 50 EMA.
Looking at today's chart on the left, we can see that the market fell into a low that was formed on the bottom of the downtrend channel, then rallied up into this head and shoulders formation inside of a similar triangle. The head and shoulders pattern completed itself three days ago, and we have basically gone nowhere. So, when we compare this to 2015, we are at the point right where the major rally occurred, that sent Bitcoin above the 50 EMA. We all know that a rally has not happened yet, but if we do see a rally here, it would be inline with what was seen in the technical developments after the exact low of 2015. On the other hand, if we see a breakdown from here, that would be a deviation from what we saw in 2015. It would fulfill the recent head and shoulders pattern, and it would be a sign that things aren't the same.
However, today looks strikingly similar to the bottom that was formed during the last bear market. That pink moving average on the bottom is the weekly 200 MA, which is something that I have been talking about for weeks now. You can see that we held it in 2015, and the low was formed on the bottom of the channel and that average. That is exactly what we are seeing today. The head and shoulders inside of the triangle, the initial 50 EMA resistance is similar, the pause after the head and shoulders. However, there are some slight differences too.
The bottom line is that we are likely to vacate this 3500 area in the not too distant future. I expect that we will see a powerful move, either up or down, that will help to confirm whether we have bottomed or not. Particularly, if we see a powerful rally back into the triangle and above the 50 EMA, that would practically be a perfect replication of the 2015 bottom. However, a powerful breakdown from here would be a stark deviation that would (in my mind) reduce the likelihood that we have bottomed.
Let us not forget! This is still a bear market, with lower highs and lows on the chart! Do not lose focus. Not a person on Earth can prove with data that the bottom is in. We simply need to see more. However, the market is certainly flashing signs that the bottom is in; not only here, but on the weekly RSI, short interest, and elsewhere.
Be smart, be nimble, and watch the data unfold. Good luck trading everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Comment
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Important update...
I just realized that I'm connecting the bottom trendline of the current triangle to the trough between the head and the right shoulder. In 2015, the triangle bottom was formed at the end of the head and shoulders pattern. So, perhaps we have not fallen out of the triangle yet. It may only appear so at the moment, because our point of reference hasn't been changed. That would require a rally back inside of the triangle, based on where i had drawn the bottom in the original analysis. I hope that isn't too confusing. Here is where the bottom of the current triangle could actually be...
As always, a lot of words from @MagicPoopCannon , but nothing useful. In every anaylsis he is bearish, but he sees bottom?! WTF man? Make your choice, will we see a rally back to 4000-5000 or decline back below 3000?! Everyone can make such analysis as: It can go up or down, no shit, really?! i will tell you. Firstly, this is not H&S pattern, secondly, Bitcoin has bottomed and currently it's unfolding a corrective wave B/2, so sooner or later we will see a rally back above previous highs towards 4500-5000 or higher for wave C/3! This is how you should have balls to predict you if you have any knowledge at all!
solidgold
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@EWNS, he's not a fortune teller! It's technical analysis. Can go either way..in a bearish channel! Can price reach top of channel? Yes but not looking likely ! Good luck with your attempt at Elliot's wave theory.
Matthew1972
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@EWNS, man he is just doing TA of a possible scenario. Very interesting for many of us. He is not a fortune teller. Noob
ew-forecast
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@matthevandaalen, Come on guys, this is not TA, not even close! This guy is just looking for possible fractals without any basis. Where are confirmation levels, where are invalidation levels?! If you're making TA, you have to know, when you are going long or short and where stops should be! But, no... this guy will tell you later, how right he was, when you miss everything!
EWNS
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@ew-forecast, This is exactly, what i want to say! Also, in this "analysis" there's nothing instructive. Obviously, he doesn't even know how H&S pattern looks like.
mbc47
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@EWNS, dude..and all those who supported you..dudes... ;)
Make up your mind you say? really? about what? where the market will go for sure?
Read again... MPC is pointing some really good and important things.
Understand how TA works -- Nobody can f..cking tell you where the market is going. especially in short term..
Make up your mind..schmucks
EWNS
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@momtchev, You should read my comment again. Im not saying where the market is going for sure, but if you're making an anaylsis, you should now, where the market will give you a signal, so where is confirmation for bulls or bears and also where the invalidation level will be then! Just an example of how it should look:
"I believe that Bitcoin is turning bullish away from 3100 lows, which is also my invalidation level, in case if drops back to 2018 lows. So, Bitcoin is currently trading around important 3500-3400 support area and if we get a sharp rise back above 4000 region, then this would be our bullish confirmation that can send price back above previous highs towards 4500-5000 or higher!"
And even if i'm are wrong, this is not a problem, i know my risks I know exactly how much I can lose!
Again, im not saying where the market is going for sure, but plan your trade and trade your plan!
mbc47
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@EWNS, I read your comment again..sounds even worst now...
You: As always, a lot of words from @MagicPoopCannon , but nothing useful.
Really? The guy has 10 mil views on TV dude! He is actually giving a lot of people great insight, including me.
And now you wan't to teach him publicly how he is suppose to do it?
Where is your better alternative/picture of the current state of affairs?
Don't just give me couple of sentences that most posters on TA discuss all day long for the last month.
I know, I've read most of them..
EWNS
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@momtchev,
"Really? The guy has 10 mil views on TV dude! He is actually giving a lot of people great insight, including me." >
Good for you then! Keep follow him!
"And now you wan't to teach him publicly how he is suppose to do it? Where is your better alternative/picture of the current state of affairs?"
You don't know who am I and you are no longer worthy of my words.