BTC: Macro arithmetic channel, bull run intact
18 April broke a lot of the structure I think many of us were working with as we track BTC's current bull run.
Yesterday I published a chart I was working from on Sunday that looked into what levels could hit if 18 April was the start of a deeper correction. However, I would have expected continuation by yesterday.
BTC continues to range. While I would expect another reach down, the lack of significant continuation to the downside makes me question the comparison to 21 February that I had based that previous analysis on.
That analysis assumed that 18 April was the first reach down, and set a Fibonacci from the top to the 0.702 on that leg, 49k appeared to be in view, if coming events were to mirror 21 February.
Drawing a channel to include 18 April suggested there may yet be room at the bottom for a lower reach.
However, there are two problems in that chart:
1) I didn't account for the difference in the EMAs between now and 21 February. A further reach down now would initiate a death cross on the 4hr chart — something that didn't happen in February, despite that downside wave reaching further, in a second, third and fourth reach down. A death cross now would suggest a dramatic drop. And probably spell the end of the present bull run and a two-peak cycle. I'm not convinced of either, though we could still see another peak this year, even if BTC hits 80k. Technically, we still have higher lows until that sequence is broken. And I also see playing out a final seven wave structure. So I was obliged to rethink the channel, and rethink whether 21 February would be replayed now.
2) The channel was drawn on a logarithmic chart. While generally logarithmic scales are preferable for looking at longer timeframes, a channel is obviously linear, and this clash of the tool and the scale function nagged me as no second wave down came yesterday.
So I started over, but this time I'm using an arithmetic chart.
I'm also using a different macro Fibonacci. This one is based on the bottom of the 2017 bull run and placing the 0.236 on the final retracement rally in September 2018 before capitulation.
The retracement rally before capitulation gives, for previous bull runs, a fairly accurate top on the 4.236 Fibonacci extension.
Using this placement, BTC's possible near top comes in around 80k, which also generally aligns with other indicators, like logarithmic regression bands.
A couple of things to note in this new chart:
1) The movements up align fairly well with the Fibonacci levels, including the January and February retracements
2) We can see how in this channel BTC has found resistance in the midline throughout March. I don't think 60k is any psychological level. I prefer to think of BTC in terms of Fibonacci levels irrespective of their value. BTC is still pushing up, to get into the final level. It finds more resistance as it reaches to full extension. But the channel base provides support, and BTC is still ascending.
3) It is interesting to note where the most recent lows have landed relative to the channel. To be sure, we wicked below the channel on
18 April. But I'm not concerned with liquidations relative to fundamental price action. I also don't believe the narrative, and I don't think 18 April was a "black swan" event. For BTC to continue up, it needed a liquidity grab.
4) What I think will happen from now is a repeat, but on a larger scale, of what happened in the green vertical band marked on the chart. The seventh and final wave, composed of seven waves. In fact, the whole structure from 08 February to 21 February is being repeated from 20 February onwards.
TL;DR: I don't think BTC will go below 53.5k.
This doesn't mean that alts won't continue to play out in their own way the aftermath of BTC's 18 April drop. But after another reach down, I expect BTC to haul up out of there, and for alt season to resume.
Feel free to comment.
Yesterday I published a chart I was working from on Sunday that looked into what levels could hit if 18 April was the start of a deeper correction. However, I would have expected continuation by yesterday.
BTC continues to range. While I would expect another reach down, the lack of significant continuation to the downside makes me question the comparison to 21 February that I had based that previous analysis on.
That analysis assumed that 18 April was the first reach down, and set a Fibonacci from the top to the 0.702 on that leg, 49k appeared to be in view, if coming events were to mirror 21 February.
Drawing a channel to include 18 April suggested there may yet be room at the bottom for a lower reach.
However, there are two problems in that chart:
1) I didn't account for the difference in the EMAs between now and 21 February. A further reach down now would initiate a death cross on the 4hr chart — something that didn't happen in February, despite that downside wave reaching further, in a second, third and fourth reach down. A death cross now would suggest a dramatic drop. And probably spell the end of the present bull run and a two-peak cycle. I'm not convinced of either, though we could still see another peak this year, even if BTC hits 80k. Technically, we still have higher lows until that sequence is broken. And I also see playing out a final seven wave structure. So I was obliged to rethink the channel, and rethink whether 21 February would be replayed now.
2) The channel was drawn on a logarithmic chart. While generally logarithmic scales are preferable for looking at longer timeframes, a channel is obviously linear, and this clash of the tool and the scale function nagged me as no second wave down came yesterday.
So I started over, but this time I'm using an arithmetic chart.
I'm also using a different macro Fibonacci. This one is based on the bottom of the 2017 bull run and placing the 0.236 on the final retracement rally in September 2018 before capitulation.
The retracement rally before capitulation gives, for previous bull runs, a fairly accurate top on the 4.236 Fibonacci extension.
Using this placement, BTC's possible near top comes in around 80k, which also generally aligns with other indicators, like logarithmic regression bands.
A couple of things to note in this new chart:
1) The movements up align fairly well with the Fibonacci levels, including the January and February retracements
2) We can see how in this channel BTC has found resistance in the midline throughout March. I don't think 60k is any psychological level. I prefer to think of BTC in terms of Fibonacci levels irrespective of their value. BTC is still pushing up, to get into the final level. It finds more resistance as it reaches to full extension. But the channel base provides support, and BTC is still ascending.
3) It is interesting to note where the most recent lows have landed relative to the channel. To be sure, we wicked below the channel on
18 April. But I'm not concerned with liquidations relative to fundamental price action. I also don't believe the narrative, and I don't think 18 April was a "black swan" event. For BTC to continue up, it needed a liquidity grab.
4) What I think will happen from now is a repeat, but on a larger scale, of what happened in the green vertical band marked on the chart. The seventh and final wave, composed of seven waves. In fact, the whole structure from 08 February to 21 February is being repeated from 20 February onwards.
TL;DR: I don't think BTC will go below 53.5k.
This doesn't mean that alts won't continue to play out in their own way the aftermath of BTC's 18 April drop. But after another reach down, I expect BTC to haul up out of there, and for alt season to resume.
Feel free to comment.
Comment:
21 Apr 2021 20:42:11: This is a very interesting and important chart by @TradingShot. Not sure if there is room there for a 83k peak. It might suggest a two-peak cycle. Right now, two peaks is the only way I can see 200k +/- coming in this year, based on my observing BTC closely these last six weeks in particular. Will BTC be trading in the 40s by end of May?
Comment:
23 Apr 2021 12:35:25: Updating here:
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