BTC's Logarithmic TL vs. Linear TL: Vote Now!
Primary Chart: BTC's Logarithmic Trendline from the All-Time High to the Present Date
BTCUSD's current down trendline reflecting the primary trend can be drawn on either a logarithmic or linear chart. Both charts are used in technical analysis. Logarithmic charts tend to be better at conveying accurate proportions of price action on charts covering a lengthy period of time and a broad span of price action.
In the case of BTC, why does it matter? Look at the down trendline drawn on a linear chart (Supplementary Chart below) connecting the same all-time high in November 2021 and the March 28-April 5, 2022 peaks. Notice the breakout?
Supplementary Chart: BTC's Linear Trendline from the All-Time High to Present Date
Other evidence suggests that the downtrend is not over yet and new lows are likely. But the choppy and trap-filled price action since June 2022 has made it difficult for any directional traders long or short.
Care to vote in the comments? It's probably true that each vote reflects the conclusions each of us has reached, and our general market expectations. My vote is that the logarithmic chart is the better TL. But my posts have remained fairly bearish this year, so this may reflect my underlying expectation that no new uptrend is being established in crypto assets despite any sharp bear rallies in the near term.
Here are some of the technical reasons (in prior posts linked below) for remaining bearish. But for each of these reasons, there may be other keen technical or fundamental arguments being made for why the lows are very near.
Bearish arguments in prior posts:
Have a great trading week!
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
BTCUSD's current down trendline reflecting the primary trend can be drawn on either a logarithmic or linear chart. Both charts are used in technical analysis. Logarithmic charts tend to be better at conveying accurate proportions of price action on charts covering a lengthy period of time and a broad span of price action.
In the case of BTC, why does it matter? Look at the down trendline drawn on a linear chart (Supplementary Chart below) connecting the same all-time high in November 2021 and the March 28-April 5, 2022 peaks. Notice the breakout?
Supplementary Chart: BTC's Linear Trendline from the All-Time High to Present Date
Other evidence suggests that the downtrend is not over yet and new lows are likely. But the choppy and trap-filled price action since June 2022 has made it difficult for any directional traders long or short.
Care to vote in the comments? It's probably true that each vote reflects the conclusions each of us has reached, and our general market expectations. My vote is that the logarithmic chart is the better TL. But my posts have remained fairly bearish this year, so this may reflect my underlying expectation that no new uptrend is being established in crypto assets despite any sharp bear rallies in the near term.
Here are some of the technical reasons (in prior posts linked below) for remaining bearish. But for each of these reasons, there may be other keen technical or fundamental arguments being made for why the lows are very near.
Bearish arguments in prior posts:
Have a great trading week!
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Trade closed manually:
Looks like the logarithmic TL was the more appropriate TL given this week's price action. The linear TL from the all-time high had been broken in October 2022 in a way that suggested the trend might be shifting from a less severe downtrend to a neutral one. But this appears to have been a massive bull trap. Ouch!
The logarithmic TL, though, was never even close to being broken as discussed above! With huge price ranges as seen in bear markets or cryptos, which have wide price ranges, it's helpful to keep an eye on the log charts too.
Thanks for your votes / comments :)
The logarithmic TL, though, was never even close to being broken as discussed above! With huge price ranges as seen in bear markets or cryptos, which have wide price ranges, it's helpful to keep an eye on the log charts too.
Thanks for your votes / comments :)
SquishTrade
