BITCOIN BREAKTHROUGH The Bottom Process & the Underlying Channel

Bitcoin is currently on its 3rd straight bullish 1W candle. That's right (even though early into the current weekly candle), we are rising for 3 weeks in a row. This move is happening straight after the $3900 flash crash and is taking a lot of traders by surprise. But should it? On this study I will show you why is shouldn't be quite as shocking, based on the underlying pattern that shows identical movements and unveils a potential bottoming process.


** The underlying Channel Up **
As you see on the chart the pattern that has been supporting Bitcoin's recovery process since the early 2018 is a Channel Up (blue lines). Not only has BTCUSD made clear Highs (red arrows) and Lows (green arrows) on its outer bands but also the middle of the Channel made perfect touches before the Higher Lows on two occasions. In fact, the recent $3900 low appears to be the second Higher Low of the Channel Up. This explains to a big extent why the price rebounded that strongly these past few week.


** The identical Channel Down formations **
I am sure that you have well noticed already that within this dominant Channel Up, there are two smaller Channel Down formations. These patterns are identical and are the sequences that took Bitcoin from its Higher High to its Higher Low (exception is the February 2020 candles which have been outside the pattern). Both formations traded mostly on the upper band and made perfect touches on the middle of the dominant (blue) Channel Up. They both ended with a very aggressive sell-off to form the Higher Lows.


** The MA30/ 300 and MA50/ 200 comparison **
To put things into another perspective, as you see on the snapshot below, the two Channel Down formations are symmetrical even in terms of Moving Averages. What the MA30 and MA300 are for the 2019/2020 Channel Down, the MA50 and MA200 are for the 2018/2019 Channel Down respectively (within 30%-33% downgrading).



** What's next? Bottoming process **
Both the RSI and LMACD are on their symmetrical positions of the previous Higher Low of the dominant Channel Up. The RSI is rising as it did on the December 10, 2018 candle, while the LMACD is coming off a bearish cross entering a sequence similar to November 2018 - January 2019 that ended with the bullish cross which started the Q2 2019 uptrend. This suggests that Bitcoin is entering the "Bottoming Process" of its new Higher High and a new uptrend should follow in the next few weeks.


Conclusion:

We have seen of course in recent weeks that Bitcoin is not detached from the economic and social environment it serves and further uncertainty due to the coronavirus pandemic can bring volatility that can largely distort technical patterns. But there are certain patterns that are hard to fail and those are the ones we should be following. After all fractal analysis is a useful tool, especially in crypto trading, that can give surprisingly accurate results such as this study made last September:



Do you agree that this has been Bitcoin's underlying pattern and we have entered the new Bottoming Process or you have another pattern to suggest? Feel free to share your work and let me know in the comments section!

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