BTC has been printing an unusually long rising wedge pattern on falling volume, and at the same time, showing a strong bearish divergence in the RSI.
Yet still it keeps creeping higher, despite these bearish signs. With all these institutional investors, do the normal market conditions even still apply?
Maybe such bearish signs will just be completely ignored and BTC will burst through the wedge to the upside.
Or these indicators will apply, as they did in past rallies, and point to a longer and stronger correction.
Currently we cannot know. I would put a slightly higher chance on the correction scenario, but who can tell what BTC is up to?
It would then be already quite soon at the upper end of the longterm trend channel, through which it will probably burst through for a while. We will have to see how BTC will react at this upper resistance line, it will be important to determine how high BTC will go in this market cycle.
As a rule of thumb I'd say: The sooner BTC reaches high values, the lower these values will be. That's why I'd really prefer a longer correction, but we shall see.
I'd say 150-200k-ish if it breaks out soon, and 300k-ish if it does the longer drawn out correction.
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The RSI still remains firmly in a bearish divergence, while BTC still slowly crawling up in that rising wedge. This is not a sign of strength right now.
I put the probability for a break to the downside a bit higher now, that to the upside.
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Looks like BTC has decided:
The multiweek rising wedge has clearly broken now on a good dump. After all, as we said, the rising wedge is a bearish pattern, especially on falling volume and bearish Divergence in the RSI.
So it indeed looks as if BTC decides for the red curve. BTC, you have chosen WISELY.
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BTC has decided. The dump path, which I thought was the more likely scenario, is now indeed confirmed. The target is at around 42k. This is a solid support zone:
1. Peak from the previous local top 2. Middle weekly bollinger band
Also, it would give a nice 35% correction from the previous top at 65k. And we really needed that kind of correction, it was long overdue.
So then, 42k, then bounce, then some weeks of sideways, before we will resume the climb to 100k and ultimately between 200-300k in this cycle.
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We could also see something like this here:
Long sideways now, until the next parabola is forming.
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So this scenario here turned out to be the right one, and it had the highes probability as I wrote, because of all the bearish signs: rising wedge, falling volume, bearish divergence in stoch RSI. Now I think BTC can do a final shakeout to 40k, can but not necessarily will, and then we resume our climb to new ATHs.
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The shakeout was of course in good old BTC manner more brutal than expected, but certainly not surprising for everyone following this idea here.
The bearish signs were all here, but uber bulls chose to ignore the signs.
What does that latest shakeout mean now? Well, I'd say not much.
We'll go on with the bullmarket. It briefly touched the lower BBand, and that's it. We might get a delay to the ATH of a few months, but that's it. Not much more happened.
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This idea is now invalidated because the drop was too low and the bounce not strong enough. We will not continue to grow towards 100k soon, instead we are going to retest the 20k support. See my newest idea.
I would prefer the red curve!
And it is there, as BTC crashed tonight with big sound. I am pretty sure, that this is not the end of this bull run cycle, BTC dominance still too high and the monthly RSI can build a second spike to 90 points.
Guess, we will get a consolidation now as described above until June, and then a bull run in altcoins and btc until autumn. Big time!
SebastianofMoon
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@regression_to_logic, Yes, it is really happening, the red curve was also my preferred scenario, as this means ultimately not only higher BTC prices, but also higher altcoin prices.
Yes, we'll see a multiweek correction and consolidation pattern now, it has started only a few hours ago as you correctly observed.
THe target I assume will lie in the 40k region.
Then a nice consolidation until summer, and then a second bullrun above 100k towards autumn, with the peak towards the end of the year :)
It couldn't have gone better.
LiGuoqing
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Really brilliant TA before today's dumping. You drew two possible direction of BTCs, and it chose a better direction. Genius!!
Hope to see your next TA analysis about XRP at the moment. XRP's dumping is more brutal than most ALT coins.
SebastianofMoon
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@LiGuoqing, Thanks a lot, I feel honored to receive such words of praise :)
Yes, I am also very happy that BTC decided to choose the red path.
It is a much better path longterm and will allow us to reach 200k+, excellent !
Good observation, I will make a post about XRP asap!
StayAwakeMarieS
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I love your insights. One of my favorites. Thank you. :)
FlaviusTodorius67, thanks for your great work, do you think the bitcoin correction is over? Our dominance has started to fall lately, if you look at history, maybe soon we will see a strong fall, what do you think?
The decline in dominance is really interesting, and very much in line with how it happened back in February 2017, when the first big decline in BTC dominance began.
I think this correction is not over yet, the confidence in the market is still too high. A nice wick down to 40k would serve as a nice basis to fuel the next BTC leg up.
This whole structure here with BTC and altcoins plays out really similar to early 2017. So yes, a further BTC correction really is possible.
CrashWhen
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BTC Dominance looks like it wants to fall off a cliff, excited for ALTS rn, specifically that LTC moonshot. I think we get rejected 67-69k for BTC and trade sideways for awhile.
SebastianofMoon
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@realisticDiamo79435, Let's hope so, I'd really like that scenario !
And it is there, as BTC crashed tonight with big sound. I am pretty sure, that this is not the end of this bull run cycle, BTC dominance still too high and the monthly RSI can build a second spike to 90 points.
Guess, we will get a consolidation now as described above until June, and then a bull run in altcoins and btc until autumn. Big time!