Hi all. I keep looking for signs about what is happening on the market. After consulting with @dieseldub I found it interesting to add up 4 stablecoins, and then plotted them by dividing their capitalization by TOTAL crypto market capitalization. Displaying chart logarithmically, I did three things: 1. Build two channels, an inner channel and an outer channel. 2. Measured percentage drop from peak to bottom in the three cases. 3. Included 9 seasons rainbow.
1. So, for most of its history, this chart has been at least in the big channel, and mostly traded in the inner channel, entering the outer channel only on peaks or declines. On June 20, the candle broke through support and trading went into uncharted territory.
2. Ok, let's see, what was the rate of decline in the past times? October 2020 - February 2021 ~ 57.3%. July 2021 - November 2021 53% June 2022 - July 2023 ~51.6% What is the commonality here? The correction is at least 50% and there is a correlation in the decline at each successive one.
3. 9 seasons. "Support / Oversold (Blue): a support area, may become a Bottom, or be broken through". Let's pay attention to the blue marker and the price behavior in the first 4 cases. However, starting from the end of April 2023 we have a large area formed on several frames of the indicator, which consists of several blue bars. It would seem that this is already quite serious oversold on the one hand, and the bottom of a large channel on the other. And around June 20, a small white cluster "Neutral (White): a wandering season without direction, evolves into Bull or Bear" appears on the 4th bar. In my opinion, the most unlikely thing happens, the price breaks the channel. What happened? Nothing in the chart itself. But it was affected by the magnetic field of a larger celestial body... What is this celestial body? SP500. Which for a month has been forming a reversal pattern with three gaps, completely unseen before. Therefore, the wandering season (white) has turned bearish after the SP500 broke 4400 level.
So, conclusions. If the market just wants to rise because it doesn't care about the rate hike announcement and slowdown in China, no arguments and calculations can work, as they didn't work for me a month ago. In case the SP500 started a correction and they announce a rate hike on the 27th, we can also expect this chart you are looking at now to rise. The only thing that remains unclear is which channel bottom the candle will test? Is it the outer or the inner channel?
We already have a fresh blue indicator. This chart is inversely related to bitcoin. If it goes up, bitcoin goes down. Good luck.
I like the horizontal channels you drew at various points. That's a really great way of sensing turnarounds at specific points. Great idea!
dieseldub
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I'm kind of liking removing BUSD from the equation. That way the data at least goes back to the 2018 bottom, includes the 2019 mini-bull top and the signals are a little cleaner still.
I still have the top parallel a little tight, so the 2022 ETH bottom still pops out of the upper line altogether, but I'm OK with it. It catches a couple other cycle tops and bottoms nicely this way for additional trade signals (like the summer 2021 bottom).
averkie_skila
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@dieseldub, I need time to think about whether it's right. Still, BUSD is a trading pair on Binance...That's a lot.
dieseldub
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@averkie_skila, for sure, it's an important weight as the 4th largest stablecoin. I'm just fiddling with things to see if I can get the most clean, consistent signals. Drawing the lines so that I specifically got touches with the summer 2021 selloff lows and the fall '21 all time highs while making sure it still lines up otherwise.
It does seem the more stable coins I add to the equation, the more that Ethereum low in June '22 pushes out of the parallel I want to use.
Although, my previous parallel set with BUSD in the equation does have that Bitcoin bottom wick touching the top parallel, where without BUSD it does not.
So yeah, variations on a theme. I'll probably cycle through glancing at all variations of this as we get close to market cycles touching either parallel.