Today I'm bringing an interesting study of the BTC bottoming. We'll zoom out to weekly chart to compare the potential bottoming of BTC through the perspective of NVT indicator.
If we draw the descending trendline that was broken after bottoming in 2015, we see that it was tagged twice and got rejected. And the bottom took place between these rejections. At this point, we could measure how long it took to break the trendline since the NVT started to signal 'below value' (green colored line). It took 11 weeks (about 77 days).
Now, if we move to current price action, we can observe a similar pattern than in 2015: descending trendline rejecting the tests, and between these tags, we find the potential bottom at 3100 area.
This week we are approaching again the descending trendline. Apparently, there's not much strength in the test of it, and the odds are leaning to another rejection.
But if we look at the NVT, we see that we are in the 11th week after it started to signal 'below value'. Isn't it great?
I don't expect carbon-copy price action. But if current bottoming is meant to rhyme with 2015, then we have about 1-3 weeks left to break the actual trendline.
Comment
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Focusing on Daily timeframe, I'm seeing NVT drawing a Bullish Divergence and bouncing off the trendline. In a previous idea, I mentioned that the break of that trendline could trigger the next leg down. That daily picture could be read as supportive to the weekly scenario presented here. But BTC still needs to draw some market structure confirming the Bullish Divergence. Check it out!
Oh, no... isn't it that your parameter of OB and OS level too high?
400 and 150 each. That doens't seem to be normal at all.
Furthermore, that isn't be changed if i modify parameter in your indicator. So your source code needs to be a little bit changed.
Please check.
gliderfund
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@tlzkrh1029, the NVT indicator is not bounded and therefore needs some flexibility to adapt the OB and OS levels to the market conditions. The levels that currently signal 'above value' and 'below value' might need some tweak in 2 years time.
Then, if we shift to higher time frames, the levels need to be adjusted too for them to remain relevant to price action. That's the case of the weekly picture.
Going to your issue: in order to customize the OB/OS parameters in the indicator, you must enable "Manual OB/OS Levels". Hope that helps!
KLYP_Investment
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@gliderfund, Lots of thanks! Your comment was so helpful!
But how come " OB level : 450 / OS level : 100 " in weekly chart ?
Is there any meaningfulness than other number?
Guillaume_Bit
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I like the weekly NVT indicator thanks but your daily divergence is on the wicks although the NVT indicator takes the close...
gliderfund
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@Guillaume_Bit, Good point! There are multiple ways to account for divergences. Some traders take them on close prices, whilst many others account for highs/lows in price action.
The fact is that most of the oscillators get calculated using close prices by default. Under specific situations, I can plot some oscillator based on highs/lows... but that's mainly for checking extreme OB/OS levels and stop loss positioning.
In my book, it is perfectly ok to account for divergences taking highs/lows in price and the oscillator based in close prices, and then wait for divergence to get confirmed. It just works more often than not.
Now, the type of indication we are getting here is quite a contrarian one when we look at the sentiment in the market. I'll keep alert on its evolution.
Because much of the directional indicators I follow are not aligned with this view and suggest a downward continuation. Certainly, this is a tricky situation.
Boon2
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BTCUSD H4 Correction up. Checkout the idea detail's and all the update's for the complete picture.
gliderfund
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@Boon2, nice study! If I get it correctly, you're expecting a run up to high-4000 range before the real test of the lows, right?
Boon2
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@gliderfund, Cheer's, Yes I'm looking for the internal H4 C up to complete the X before we get Z down. The structure inside wave X is just the basic ABC, That's all I can forecast but the end structure could turn out to be a number of corrective structures. At this stage it's looking good for the simple ABC, where C end's is anyone's guess, price only need's to break the top of wave A to complete the structure but usually price will test the 100fib.
Biitcoinhooked
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Agree the weekly says bottom shall be in soon.keep up the good work.
thesean
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Switch to Daily and NVT tells a much different story
400 and 150 each. That doens't seem to be normal at all.
Furthermore, that isn't be changed if i modify parameter in your indicator. So your source code needs to be a little bit changed.
Please check.