Hello dear crypto friends, hope you're doing well! ;)
I was away on the weekend, I've searched through TradingView and couldn't find a single analysis questioning Bitcoin's crazy move.
Therefore, in this analysis, we're gonna give an answer to the question: How could Bitcoin surge 40% over the weekend?
We're gonna look if fundamental news by itself can change prices, or, if the trading anatomy of the market still plays a role in those extreme cases.
But before we start off: It took me over 3 hours to write this analysis for you, and the only fee I'm gonna be asking you is 1 like + 1 comment if you had value! ;)
So, let's dive right into it.
Prior to the bullish U-turn, we had a huge Descending Triangle break on the Daily. Following that, we got into a Bear Flag, and a bear break was the more probable scenario. But the bear break didn't see follow through, falling into previous S&R zones (support & resistance zones) in the $7k region.
How could we sense this already before the U-turn happened?
If we look at the Hourly chart, we can see that we build even another mini Bear Flag, but instead of following through, we got into a prolonged Equilibrium range. The longer we stayed in this range, the more the scenario of breakout became 50:50.
So eventually, wenn the bulls broke out of the Equilibrium, this was not a surprise. In our Discord channel, I had already told our members that I closed my previous XRP short position with the break of lower Highs on the 4H, and therefore trend change.
Fundamental news comes out
And then we got the fundamental news that Xi Jingping -the chairman of China's communist party- is calling for China to play a leading role in the Blockchain space. This message got amplified by leading American experts in the field.
David Marcus from Libra and Facebook Messenger retweeted it with a thinking face: twitter.com/dav...733066363490305?s=20
Brian Armstrong form Coinbase tweeted: The race is on. twitter.com/bri...759754568814592?s=20
Conclusion: This news definitely had an immediate fundamental effect on the price early on Friday, which just amplified the bulls negating the previous Bear Flag, where the bears already didn't see follow through.
What followed next is not unusual: Only the extent of it was pretty much unexpected.
XRP's 2018 tripling in the price
XRP's price did a very similar move in September last year towards the Swell conference: The bears couldn't see follow through on a minor bear breakout. Following that, we didn't just see the U-turn in very similar shape & form, but we indeed broke 3 major resistances all at once, more than tripling the price to 80 cents with a huge wick & correction following that.
You might ask yourself now: How is that possible that we had a similar pattern previously, which played out the exact same way. Like how could we have seen this coming?
The concept behind it is easy to understand, this is exactly where technical analysis & proficiency in S&R zones comes into play. It's starts with asking yourself, who is trapped?
The Short Squeeze
When we get a U-turn, always the position which was previously on the winning side, now moves to the losing side. So if a bear break sees no follow through, all the bears will be trapped:
How do bears close their position? => By going long. So if I'm -5, I need +5 to get to zero back again. On top we have traders going long anyways. And even on top of that we have noobs who are just FOMOing without any plan, even more multiplying the bullish breakout.
When we look at the Bitcoin chart, we can perfectly see this playing out:
1. The bears are trapped from the bear break at 7,8k, who were waiting for follow through
2. The bulls bought the mini Equilibrium breakout
3. The big short squeeze comes into play: The bears from the 8k -8,8k region are closing their position now by going long. We can perfectly see how important this zone was, because the market build a mini Bull Flag, before it could break higher.
4. FOMO: Noobs just blindly longing, some of them at the tops, while the bottom long traders are getting out: Huge wick at $10,5
How could we predict that $10,5 would be the end of the move?
Now when we look at our predictive indicator framework Odin, which we have been deploying for hedge funds and now also for retail traders, we can also see the market reaction perfectly captured by the Volatility Bands (VTB). The bands are a proprietary measurement of the VWAP -which is the volume weighted average price, a purely institutional viewpoint, + internal calculations about mass and energy, which enables us to predict with extremely high accuracy, whenever an extreme inside the chart is reached.
We can perfectly see that with reaching the outer red bands at 7,3k mean reversion is activated, which will inevitably lead to coming back to the VWAP (yellow line in background). Also with hugely overshooting at $10k, the outer bands are reached, activating mean-reversion, and therefore seeing a sell off until we reach the VWAP again.
Conclusion
Was this an amazing trading opportunity? Absolutely. Did I profit from it personally? No: I was away on Friday at a startup event and I could never have seen it coming in this magnitude, and therefore didn't have any orders set. It was literally a trade where you would've had to sit in front of it to be able to capture it.
But guess who got that move? => Our bot did, which automatically trades based on that knowledge that I've just shown you. It went from 0.0397 to 0.0578 on our showcasing account.
Bots are tricky to configure, and hard to trust, but they solve one of the critical issues of trading: Time. Time is money. You cannot sit in front of the computer all the time to be able to capture all those magnificent moves. You could very well have also been asleep while it happened.
In any case, if you're a serious trader & HODLer in this space, you need to actively manage your account or let someone else do it for you, otherwise moves such as these can wipe you out pretty quickly. If you're interested in our automation offering, just look in the description and apply, we're happy to work together with you! ;)
Having said that, don't forget to smash the like button, to follow us so you don't miss out on our amazing trading content. I wish you a beautiful rest of the week no matter where you are on this planet and say adios amigos, see you!
Edgy is providing online education & indicators only. We are not a financial advisor, nor do we hold any formal qualifications in this area. You're trading at your own risk. No matter what you do, please set your stop loss. Please be aware, that you can lose all your money on the online exchanges.
I was away on the weekend, I've searched through TradingView and couldn't find a single analysis questioning Bitcoin's crazy move.
Therefore, in this analysis, we're gonna give an answer to the question: How could Bitcoin surge 40% over the weekend?
We're gonna look if fundamental news by itself can change prices, or, if the trading anatomy of the market still plays a role in those extreme cases.
But before we start off: It took me over 3 hours to write this analysis for you, and the only fee I'm gonna be asking you is 1 like + 1 comment if you had value! ;)
So, let's dive right into it.
Prior to the bullish U-turn, we had a huge Descending Triangle break on the Daily. Following that, we got into a Bear Flag, and a bear break was the more probable scenario. But the bear break didn't see follow through, falling into previous S&R zones (support & resistance zones) in the $7k region.
How could we sense this already before the U-turn happened?
If we look at the Hourly chart, we can see that we build even another mini Bear Flag, but instead of following through, we got into a prolonged Equilibrium range. The longer we stayed in this range, the more the scenario of breakout became 50:50.
So eventually, wenn the bulls broke out of the Equilibrium, this was not a surprise. In our Discord channel, I had already told our members that I closed my previous XRP short position with the break of lower Highs on the 4H, and therefore trend change.
Fundamental news comes out
And then we got the fundamental news that Xi Jingping -the chairman of China's communist party- is calling for China to play a leading role in the Blockchain space. This message got amplified by leading American experts in the field.
David Marcus from Libra and Facebook Messenger retweeted it with a thinking face: twitter.com/dav...733066363490305?s=20
Brian Armstrong form Coinbase tweeted: The race is on. twitter.com/bri...759754568814592?s=20
Conclusion: This news definitely had an immediate fundamental effect on the price early on Friday, which just amplified the bulls negating the previous Bear Flag, where the bears already didn't see follow through.
What followed next is not unusual: Only the extent of it was pretty much unexpected.
XRP's 2018 tripling in the price
XRP's price did a very similar move in September last year towards the Swell conference: The bears couldn't see follow through on a minor bear breakout. Following that, we didn't just see the U-turn in very similar shape & form, but we indeed broke 3 major resistances all at once, more than tripling the price to 80 cents with a huge wick & correction following that.
You might ask yourself now: How is that possible that we had a similar pattern previously, which played out the exact same way. Like how could we have seen this coming?
The concept behind it is easy to understand, this is exactly where technical analysis & proficiency in S&R zones comes into play. It's starts with asking yourself, who is trapped?
The Short Squeeze
When we get a U-turn, always the position which was previously on the winning side, now moves to the losing side. So if a bear break sees no follow through, all the bears will be trapped:
How do bears close their position? => By going long. So if I'm -5, I need +5 to get to zero back again. On top we have traders going long anyways. And even on top of that we have noobs who are just FOMOing without any plan, even more multiplying the bullish breakout.
When we look at the Bitcoin chart, we can perfectly see this playing out:
1. The bears are trapped from the bear break at 7,8k, who were waiting for follow through
2. The bulls bought the mini Equilibrium breakout
3. The big short squeeze comes into play: The bears from the 8k -8,8k region are closing their position now by going long. We can perfectly see how important this zone was, because the market build a mini Bull Flag, before it could break higher.
4. FOMO: Noobs just blindly longing, some of them at the tops, while the bottom long traders are getting out: Huge wick at $10,5
How could we predict that $10,5 would be the end of the move?
Now when we look at our predictive indicator framework Odin, which we have been deploying for hedge funds and now also for retail traders, we can also see the market reaction perfectly captured by the Volatility Bands (VTB). The bands are a proprietary measurement of the VWAP -which is the volume weighted average price, a purely institutional viewpoint, + internal calculations about mass and energy, which enables us to predict with extremely high accuracy, whenever an extreme inside the chart is reached.
We can perfectly see that with reaching the outer red bands at 7,3k mean reversion is activated, which will inevitably lead to coming back to the VWAP (yellow line in background). Also with hugely overshooting at $10k, the outer bands are reached, activating mean-reversion, and therefore seeing a sell off until we reach the VWAP again.
Conclusion
Was this an amazing trading opportunity? Absolutely. Did I profit from it personally? No: I was away on Friday at a startup event and I could never have seen it coming in this magnitude, and therefore didn't have any orders set. It was literally a trade where you would've had to sit in front of it to be able to capture it.
But guess who got that move? => Our bot did, which automatically trades based on that knowledge that I've just shown you. It went from 0.0397 to 0.0578 on our showcasing account.
Bots are tricky to configure, and hard to trust, but they solve one of the critical issues of trading: Time. Time is money. You cannot sit in front of the computer all the time to be able to capture all those magnificent moves. You could very well have also been asleep while it happened.
In any case, if you're a serious trader & HODLer in this space, you need to actively manage your account or let someone else do it for you, otherwise moves such as these can wipe you out pretty quickly. If you're interested in our automation offering, just look in the description and apply, we're happy to work together with you! ;)
Having said that, don't forget to smash the like button, to follow us so you don't miss out on our amazing trading content. I wish you a beautiful rest of the week no matter where you are on this planet and say adios amigos, see you!
Edgy is providing online education & indicators only. We are not a financial advisor, nor do we hold any formal qualifications in this area. You're trading at your own risk. No matter what you do, please set your stop loss. Please be aware, that you can lose all your money on the online exchanges.
