VictorCobra

Bitcoin During Parabolic Runs - Watching the 4H Moving Averages

Long
BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
This is a quick post to show where optimal "buy in" points occurred during Bitcoin's last parabolic run, as well as when it started to really look like BTC price was losing momentum. I don't think Moving Averages are great in necessarily predicting where price will go, but I do think they're a useful tool for assessing momentum. When upside momentum is strong, the bullish alignment of the MA's remains largely intact. The death cross generally only indicates that momentum has already slowed.

On the left side of the chart, you can see how Bitcoin reacted each time the red 50 MA got close to the yellow 100 MA on the 4 hour chart. Bitcoin's first all-time high break of this cycle took roughly 3 attempts. On both rejections, the 50 moved down to touch the 100. The major support was found at the 200 MA (teal).
Then, during Bitcoin's first major correction from the $42k level in January, Bitcoin even dropped below the 200 MA, but eventually reclaimed it. The 50 was also pulled below the 100, but this did not last for long. Consolidation ended once the 50 was reclaimed as support.
Bitcoin's loss of momentum was signaled in April, when price started to confirm the 200 MA as resistance, and the 50 got pulled below the 100 for a longer period of time. Before peaking in mid-April, price rebounded off the 200 MA 3 times (once in February, and twice in March).

So, if Bitcoin is to continue to the upside, we might expect the 4H MA's to offer at least short-term buying opportunities. However, traders should be careful of slowing momentum if the 50 gets pulled below the 100 for an extended period of time, and especially if the 200 becomes resistance. Personally, I'm waiting for a kind of blow-off situation, and I'm not sure the next peak will look much like the one from earlier this year. I'm curious to see if and when some serious volume shows up.

The long term trendlines on this chart show possible areas where price likes to gravitate, both to the upside and downside.

Here is the current MA structure on the 4 Hour, zoomed in:
This is not meant as financial advice. This is meant for speculation and entertainment only!

-Victor Cobra
Comment: Due to extremely high funding and weaker spot buying, I think it's possible price will need to drop towards the 200 MA on the 4H, which is currently below 54k. In theory, this should offer the strongest support if Bitcoin is to maintain the uptrend. Also open to a shallower drop towards the yellow 100, which is below 61k.
Comment: Perhaps we see somewhere in the middle - funding was too high for Bitcoin to hold the $60k level, but sellers might not be able to take price much below $57k. The 200 is moving steadily up from here, which provides support now between $54k and $55k. Euphoria and irrational behavior in the altcoin market (looking at you SHIBA INU) might limit Bitcoin prices, just as it did in May. Time to be careful.
Comment:
Comment: Current structure. Do not really want to see Bitcoin break back into that wedge, if we're going to see shorter term bullish price action. A break back into the wedge could send Bitcoin quickly to the 4H 200 MA, and the mid-$50k's.
Comment: Finally getting close to the 4H 200 MA!
Comment: And there it is! A pretty violent reaction once BTC got close to that 200 MA on the 4H.

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