The recent volatility and inability to make a new high and break above the $10500 Resistance, have made me look again on the wider Bitcoin charts. On this study I look on the 1W chart in particular and compare the current spot we are on based on the Fibonacci time channel of the previous Cycle.
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** The Fibonacci framework ** The framework I use is this. I measure each Fibonacci Timeline from the Bottom (Fib 0) of the each Cycle until its Top (Fib 1). The 1st Cycle on this chart is from October 2011 to December 2013. The 2nd Cycle is from December 2014 to December 2017.
** Cycle 1 ** Once the 1st Cycle ended, the price reached the 1W MA100 (black line) and consolidated until roughly after the Fib 2 time extension level (orange vertical). The consolidation was roughly in the form of a Triangle. Then by the time the 1W MA100 and MA200 squeezed, BTC has broken to the upside and has essentially initiated the Parabolic Bull Phase of the Cycle that peaked at December's 2017 ~$19800 All Time High.
** Cycle 2 ** That brings us to Cycle 2, which ended on the December 2017 peak. The aggressive run of April-June 2019 and subsequently the COVID sell-off distorted the price action creating new short-term pattern, but on the long-term Bitcoin converged again back to the 0.5 Fibonacci retracement level from its $3200 market low. We are currently on the way to reach the Fib 2 time extension level (orange vertical again), where the price consolidated during the previous Cycle and as mentioned was the last time barrier before BTC made the 1W MA100/ MA200 squeeze, and turned the 1W MA100 into the trend-line that supported the Parabolic Bull Phase of the Cycle.
Does this mean we are still going through a lengthy (Triangle) consolidation around the 0.5 Fibonacci retracement level that will start breaking upwards after the Fib 2 time extension level (which is now placed on November 2020)? Very possible based on that model. Note that this model is in full support of Bitcoin's theory of Lengthening Cycles and diminishing returns over the course of the years. This is a subject I have analyzed extensively in the past.
So what do you think? Is this consolidation going to play out, giving us more time and opportunities to accumulate BTCUSD? Feel free to share your work and let me know in the comments section!
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So much information consolidated into such a concise explanation! Very well done, on all levels.
I would also note that there is a recursive and nested pattern of declining channels, where a retracement to the 50% line coincides with a 0.786 retracement of the prior rally. Which in the current channel occurs on Nov 9. Very close to your vertical line 2 in your cycle 2. This is well below the 200W MA, however.
TradingShot
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@Crypto-Swing, Excellent charting. Thank you for sharing such a detailed piece of work.
If you look on the 1D chart for mid-June through Mid-July (same time of year as right now 3 years ago) you'll see not only a similar type of squeeze preceding a large bull run, but also the MACD pattern is very similar... BTW the BB are also technically in a squeeze right now.
TradingShot
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@cosmicnexus, That is true about the BB. I wanted to include them on the chart but I was afraid it would made it too crowded. Great observation anyway nexus.
@TradingShot, if you look carefully at the 1D chart for July 14-16 2017, you'll see there was a small lower side breakout of the BB squeeze that was a bit of bearish head fake, then after that the upward climb began which climaxed at the all time BTC high of app. 19,650 in mid December 2017, from which it has pulled back quite a bit. The price structure and MACD formation in early July 2017 looks a heck of lot like what we have now. After that downside BB squeeze breakout/headfake and subsequent climb we've never again seen prices down in the range they had been at prior to that occurring (< 2000).
It will be very interesting to see if we get the downside BB squeeze breakout followed by a rise. If we do, it could be an indicator that this is a nealry exactly 3 year cycle repeating but at a higher level of price structure and activity. In 2017 that breakout also occurred almost exactly a year after the previous halving. We are now only 2 months past the previous halving, but I think a case can be made for it occurring a bit more quickly now because the BTC market cap and volume are significantly greater that they were back in 2017. That said, if this BB squeeze continues and we get that small downside breakout with a green candle confirmed reversal that puts up above about 25-40%BB I am thinking I'll go in at that point with everything I have.
patrickfx
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3000 dollar soon
TradingShot
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@patrickfx, I am not against it but please justify your opinion with a chart.
heish
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Great content! It is possible that we can accumulate during quiter periods. However, I believe we have not seen the bottom yet.
I would also note that there is a recursive and nested pattern of declining channels, where a retracement to the 50% line coincides with a 0.786 retracement of the prior rally. Which in the current channel occurs on Nov 9. Very close to your vertical line 2 in your cycle 2. This is well below the 200W MA, however.