TradingShot

BITCOIN The hidden FAIR VALUE channel no one is talking about!

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Let's start of with the obvious. That is Bitcoin currently testing the 10,450 - 10,500 Resistance zone , the level that I called months ago "President Xi's level" as it was caused by China's President Xi comments on Bitcoin and the Chinese involvement on Blockchain technologies. It goes without saying that it is an key level and the volume will so if it can break and how sustainable the current uptrend can be. I have to say though that so far the 1D RSI pattern shows weakness within its own Channel. But I have found a Channel that is even more important in my opinion that the above.


** The FAIR VALUE Channel **
So what is this channel and why is it so important? It is the orange Channel Up shown on the chart which starts with the Higher Highs and Higher Lows after the December 2018 $3200 bottom (the bottom of the 2018 Bear Cycle). That Channel kept the price contained from December 2018 until April 2019 and in my opinion represents Bitcoin's fair value. Why fair? Because the break above 6000 - 6500 was caused by the strong fundamentals and news at that time. It was no coincidence that the price (after peaking in June) corrected back into the Channel and made the $6500 bottom EXACTLY on its Higher Low trend line last December (see chart).

Currently BTC is testing the Higher High (upper) trend line of this Channel. A break-out gets us again inside the overbought zone, which as we head into the May (3rd) Halving is something that euphoric traders will most likely ignore. Especially as the bullish sentiment will be boosted by the emerging Golden Cross, exactly as it happened with the April Golden Cross. So effectively this euphoria can make us test the $13800 multi-month high sooner than (technically) expected.


** The Support Zone until the Halving **
What I want to concentrate on in this analysis is the new Support Zone created by the two Channels and will most likely support us until the May Halving. The first Channel is the Fair Value I talked about and the second is the one (dotted lines) that started again on the December 2018 $3200 bottom but is on a lower slope as it includes the first two Lower Lows. As you see on the chart, this also made contact with the December 2019 $6500 bottom. Effectively that bottom was made exactly on the cross of the two Channels. The area that starts after that contact (light blue Triangle) is the one I believe will be our Support until the Halving.

This is the level which I believe long term traders should keep their attention too. As a long term trader and investor myself I always look at zone where I can add. Those who caught the $6500 bottom with us, can feel safe as most likely we won't see that level again. What we should do, is keep adding on solid technical pull backs within Bitcoin's Fair Value zone, which right now is the one I am analyzing on this study. Accumulation zones changed and that might happen in the future but we will adapt accordingly.

What do you think? Will you be buying into the Resistance break-out as a short term trader or wait for a possible pull back and add to your portfolio? Let me know in the comments section!

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BONUS - Because I talk about long term trading in this analysis, I will back up my perspective by posting below my past studies where I clearly stated that $6500 was the bottom of the correction months before it happened:









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Comments

Every trader has seen the log chart and can see the parabolic adoption curve. For some reason they ignore it like it doesn't matter even though it's the longest running and strongest trend in Bitcoin with thousands of data points.
+6 Reply
TradingShot B166ERcrypto
@B166ERcrypto, Very strong trend line indeed. I call it the parabolic growth curve.
+3 Reply
B166ERcrypto TradingShot
@TradingShot, Yasss! It made it so easy to call the bottom in Dec. I had my chips ready to go and have doubled my corn in two months.
+2 Reply
TradingShot B166ERcrypto
@B166ERcrypto, Well done!
+1 Reply
B166ERcrypto TradingShot
@TradingShot, If you know what the "mean" is, you know what the bubbles will pop up from and back down to. ;-)
+1 Reply
You obviously put a lot of thought, time and effort into this article with all the different chart perspectives. Some of the information I have a hard time understanding, but I can see, that what you have determined from the data has significant value. Thanks much for your contribution to help other traders understand the whole picture by showing all the smaller variables and details of the price action and reassembling a picture of the whole.
+5 Reply
@BeckyCS, Thank you, what a warm comment! I am always happy to help and share with the community!
+1 Reply
There's no point in arguing where is a hypothetical "fair value" when 90% of the people involved in Bitcoin are driven by fear, greed hysteria.
"An asset is worth what people are willing to pay for"
+5 Reply
TradingShot fredrechange
@fredrechange, Supply and demand.
+1 Reply
fredrechange TradingShot
@TradingShot, supply and demand are the stone and silex of microeconomy. They usually work to some extent but they're terribly unrefined.

If we were perfectly rational human beings, a Lacoste polo and a regular polo that have roughly the same production cost would have roughly the same price. And Bitcoin would have a fair value at its production cost.

But then the markets would be efficient and one could hardly make money out of them consistently...
Reply
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