Traders, I believe you will like the facts put forward in today's analysis on the weekly chart for bitcoin, it's a simplistic overview of what I see happening right now.
My main focus is the comparison between the current and previous bear market, there are a lot of similarities between both cycles that we can use to our advantage.
Firstly I'd like to talk about the overall decline in both market cycles.
During 2013 to 2015 bitcoin dropped from $1170 to $150 resulting in a decline of 87% which lasted 413 days.
During 2017 to 2019 bitcoin dropped from $20000 to $3140 resulting in a decline of 84.40% which lasted 364 days.
The percentage decrease and timespan are extremely similar in both cases, you'll find an in-depth calculation of bitcoins movements from my post regarding cyclical measurements below.
Going forward if I find this would be helpful to other traders I may revise and update the measurements shown in "Bitcoin - Cyclical Measurements" so they are more relevant in the current bitcoin market.
Moving onto my next focus point in today's analysis... The re-test of weekly resistance following the recently found "market bottom" which can be seen in both cycles as shown in my analysis.
Let's take a look at the price action from 2015 to provide more detail on what I'm really looking at.
As you can see this level held extremely well prior to price declining to $150, this support turned key resistance prevented a breakout during early July 2015, which was quickly followed up by a decline of 37.70% lasting 49 days. Only after this decline did price experience a breakout and continuation to the upside which resulted in a 2 year bull market and ultimately leading to the current all time high of $20,000 after years of progression.
When we take a look at the current price action for bitcoin, it holds a similar structure.
The resistance bitcoin is now testing is much stronger than before, this support level held for 9 months with at least 5 separate tests in which it finally broke during November 2018. For anyone looking at bitcoin I would pay close attention to the next few weekly candlesticks, mainly their closing prices and figure out what it is suggesting short-term.
It is highly likely bitcoin will fall short at this weekly resistance level and history will repeat itself, the bulls will be put back in their place (for now) and we'll experience a minor correction either to the support trendline or a similar decline to the previous cycle... 37.70%?
A smaller correction to the trendline would result in a decline of 20% or less which is unlikely, if a sell-off does happen it's likely it'll break that area and push further towards $4,000.
As mentioned this all depends on the price action in the following weeks.
This post is open to discussion, feel free to leave your own analysis below.
Comment
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Quick update for all those following my analysis, this is the current situation on the 1h chart... If we see a break of structure and a close below support (referring to the rising wedge formation) then we will see price push towards $5900 followed by $5650.
As for me, I think a short-term pullback is quite likely. I believe the true bottom will be reached when red MA has crossed green MA. Not earlier. As in July 2015, the situation today is that the price has risen above the green line. The main difference to 2015, however, is that red and green are not yet flattened (they're not parallel at all) and still far apart from each other. Since the daily RSI is deep in the overbought territory, the Bitcoin price will fall below the two curves next (as in 2015). However, given the greater distance between red and green, it will take some time for the price to settle and the curves to flatten. That's why I believe we have plenty of time to reach the "true bottom". Until then, many things can happen. I would not be surprised if Bitcoin makes a new low in the coming months.
It is just my current view (also explained in my last idea). Of course I could be wrong. We will see. Good luck for all.
LewisGlasgow
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@ReallyMe, thanks you! I agree with main part of the analysis and believe your view will be achieved if price fails to break $6,000 and decline to the region of $4,000, given this will take several months to occur the MA's should flatten out by then.
Right now I don't see price dropping lower than $3140 but I'm not ruling it out, you may well be right.
All the best!
gregb1
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@ReallyMe, Why exactly should the market retrace how it did in 2015? I'm really curious as to why you think so. Is the market the same today as it was in 2015? I believe right now is the time to be looking at the fundamental factors rather than technical in what's driving the price.
LewisGlasgow
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@gregb1, markets decline on great news and excel on bad news, pay more attention to where we are in the current market cycle and then relate that to fundamentals.
ReallyMe
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@gregb1, I didn't say it should. It could. The reason for this is that the market usually does that when the price was moving below red and green for a while and then suddenly changes sides (breaks out to the upside) to see if it can now move above red and green (=trend reversal). Most of the time after that "changing sides", a pullback comes back to the the previous side, a re-test. One guy explained it quite good commenting on my idea "It's just the way of markets. Smart money wants to make sure there are proper floors in place to support large bull moves without having to give it all back at the slightest bad news. Plus crypto is particularly volatile, so retesting lows/supports is essential." It happened in 2015 -- a re-test. It could happen again. Not because the market is same today as it was in 2015. Because that's the way any market moves. A re-test is essential. We have not had a re-test of $3200 yet.
gregb1
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@ReallyMe, Everyone's been calling a retrace but here we are almost at $7,000
ReallyMe
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@gregb1, That's true. Fascinating. BTC is always good for a surprise. With the RSI oversold like crazy. I only say, what goes up must come down. Just my opinion.
gregb1
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@ReallyMe, I do agree that this won't last forever. So adjust your stop loss accordingly
ReallyMe
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@ReallyMe, a slip of the tongue: I meant to say "overbought", of course, not oversold
As for me, I think a short-term pullback is quite likely. I believe the true bottom will be reached when red MA has crossed green MA. Not earlier. As in July 2015, the situation today is that the price has risen above the green line. The main difference to 2015, however, is that red and green are not yet flattened (they're not parallel at all) and still far apart from each other. Since the daily RSI is deep in the overbought territory, the Bitcoin price will fall below the two curves next (as in 2015). However, given the greater distance between red and green, it will take some time for the price to settle and the curves to flatten. That's why I believe we have plenty of time to reach the "true bottom". Until then, many things can happen. I would not be surprised if Bitcoin makes a new low in the coming months.
It is just my current view (also explained in my last idea). Of course I could be wrong. We will see. Good luck for all.