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BITCOIN Why you shouldn't be scared to buy 20% dips

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
So Bitcoin had a rather sharp pull-back on Monday, which reached -20%. Many traders got scared to enter the market but to the surprise of many, the fall got bought back immediately and in 1 day all losses were erased. It is interesting to mention that the rebound happened on the 4H MA50, as I described on my post last Sunday (see below):


In this cross-cycle comparison study, I show why that shouldn't surprise you and why you shouldn't be scared to buy such dips and accumulate BTC .

As you see on the chart below, during the last Parabolic Phase of Bitcoin's previous Bull Cycle (in 2017), such -20% pull-backs were quite common. In fact, if we count the the two -18% dips as 20%, then we had a total of 5 times that the price pulled back that much during the last parabolic phase. As Parabolic Phase, I denote the period after the former All Time High ( ATH ) broke.


As seen on the chart, during that period, we had a -30% correction 4 times and 1 time the price dropped by -40%. It is important to note that on the 1D time-frame (both charts displayed in this study are on that time-frame), the 1D MA200 (orange trend-line) was never made contact with, 2 times the 1D MA50 (blue line) initiated a rebound, while the 1D MA100 (green line) kick-started a rise 3 times (so naturally the MA50 didn't hold 3 times).

So back to the present day and Cycle (and the main chart of this study), since the former $19900 ATH broke in December, we may consider that we have entered the Parabolic Phase of the Bull Cycle, in a similar fashion as in 2017. So it should be no suprise that the -20% pull-back was bought, as based on the previous Cycle, chances were that it would. If we want to broaden our horizon, a -30% drop from the current levels would be around $25000, making a nice contact on the 1D MA50 (blue trend-line). Again with extremely high probabilities of being bought back. A -40% drop (remember only happened once in the previous parabolic run), would be around $21500, which would make contact with the 1D MA100 (green trend-line).

This is just to show why if you are a buyer you shouldn't panic on such occasions and should have the composure to buy such dips. Let me know your thoughts on that and if this can be a useful framework for you moving forward.


Feel free to share your work and let me know in the comments section!

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Comments

let's wait for a new reload now! great chart and write-up.
200coins
+10 Reply
TradingShot ProjectSyndicate
@ProjectSyndicate, Thanks PS both for the comment and the tip! Keep up the good work you do for this community.
+1 Reply
Thanks for your educationnal contribution. We al see the macro curve is overextended if we are aiming for ~150K in december 2021.
But to "buy the fucking dip" you have to "sell the euphoric top" first !
+10 Reply
TradingShot Vision2077
@Vision2077, You're welcome Vision! There are people who don't sell at all and they rather accumulate more on every pull-back. I can't blame them. It's been a winning strategy for so long.
+5 Reply
I'm so ready for this thing to cool down LOL. Crushing it but don't trust it anymore. A good cleansing sell-off would be great!
+8 Reply
TradingShot GunMoney
@GunMoney, What a day today has been though!
Reply
GunMoney TradingShot
@TradingShot, Today, yesterday, the day before LOL That XLM rally was great! In at $0.17 out at $0.35. Considered selling at $0.40 but hesitated and set stops incase we kept surging. We didn't. I haven't sleep much this week LOL Yeah, insane price action. This "double-top" adam & eve pattern has me thinking we're heading down to 200H SMA ($32,000 or so). I'm 100% out, so would love to see it ha
Reply
Excellent and value add information in this bull cycle for folks to understand!
+6 Reply
TradingShot CarpeMomentum
@CarpeMomentum, Thanks CM. Always a pleasure.
+1 Reply
Prepare for $17K
+5 Reply
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