Just having a play with some patterns on the daily timeframe, and saw some interesting repeating ones.
The higher highs leading up to the 20k top seem to loosely track a parabolic curve. That's pretty obvious in hindsight. But there are frequent corrections in the fib. 0.5 to 0.618 retrace intervals shown as red boxes within these blue box bull movements. Similarly, the lower lows of the broad correction since the 20k top appear to be loosely tracking an asymptotic curve, which is slightly less obvious, though becoming more so as time goes on.
The question I'm asking now is, are we breaking out of this asymptotic curve? Or are we correcting lower first, perhaps even to the long-term trend line?
It's easy to get caught up in the hype of strong bull movements on shorter time frames, but if you take a birds eye-view, this recent bull movement is very much still in keeping with several other smaller time frame bull movements that track the asymptotic curve during this broader correction. And each of them subsequently corrected lower. I'm not saying this will happen again, though it is quite possible. And even if this does happen, the long-term trend line is highly likely to serve as a strong support. So I wouldn't expect prices much below 6k.
The likelihood of a moderate correction now seems quite high given the rapid rise in price over the last days. If we are indeed preparing to moon, then we might be looking at price action similar to the bullish price action in box 2 during the early stages of the bull run to 20k. Especially given the similarity in price extent and duration to the bullish movement from the recent $5750 low. Then, even in a medium-term bull scenario, a fib. 0.5 to 0.618 retrace, which appears in almost all the other major retraces during the previous broad bull movement to 20k, would put us somewhere around $6800-$7100 before beginning the next bull run break-out through the asymptotic curve.
However, after correcting this far ($6800-$7100) we could also just gradually continue down to the long-term trend line near our previous $5750 low. At this stage any of these scenarios is possible, and it's important not to get locked into any one of view until there is further confirmation. One thing I'll be looking for to confirm a medium-term bull trend, is a convincing break above the asymptotic curve we are currently touching. But that probably won't happen until after a modest correction. Let's wait and see.
Take away? Extremes are not healthy or realistic. Markets don't move in straight lines. Even if we are in the early stages of a bull run, corrections must occur regularly to bring in fresh capital to springboard the next bull movement.
So don't buy into all the hype that FOMO's people into buying highs. All the good analysts say it is better to wait and buy supports.
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Discussing with a colleague, there is another compelling bit of evidence suggesting a possible $8500 high and $6800 support. The dark yellow 200-day MA nearly intersects the asymptotic curve at the $8500 high, which can be seen as strong resistance. The blue 50-day MA intersects the 0.618 fib.retrace region corresponding to the bottom of the red box, which can be seen as strong support.
I'm not sure it will repeat again.
But if the Bull wanted to run further this pump from 5.7k, why they made a retracement just over the main down trand line from Feb. this year?
There is a one of the strongest resistance line around 8.1k.
Why did they brokeout the resistance and then brokedown again?
What if the Bull would have drove BTC over 9k, at least over 200 ma, and then made a just light retracement over the 8.1k, is it ready for the party?
Anyway now BTC keep its retracement line from 5.7k.
Time will tell.
Thanks for your sharing.
dalmazio
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@divan1004, seems to me that if we break through the green arc convincingly, that would suggest we are in the early stages of a bull. If not, then we may have a bit more correcting to do first. And yes, that's also a strong bull signal: breaking through the green arc, then coming back to test and bounce off the 200 MA. Cheers!
dab1rd
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just when you spot a pattern it will change, nothing will repeat forever. good chance we will break that green arc line you drew and head to 9k-10k before any real correction.
dalmazio
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@dab1rd, certainly possible. If we do break through the green arc convincingly, then it seems that would be a strong indication that we are in the early stages of a bull movement. But some correction (the red box embedded in the blue) is still very likely at this stage, on par with, say, the correction in box 2 of the last bull to 20k. And if we are in a bull, the 50-day MA (blue line) is also a good support to test and bounce before breaking through the green arc.