Bitcoin, Baseball, & the Lunar CyclesBitcoin, Baseball Superstitions, and the Lunar Cycles: Using the Moon Phase Indicator to Enhance Your Trading Success
It is rather well known amongst the trading community that J.P. Morgan once stated, “millionaires don’t need astrologists, but billionaires do”. I wonder though… Do most traders know that Evangeline Adams, the financial astrologist he chose to consult prior to big plays, was also the same woman sought after by other high ranking executives and famous magnates of the time such as Charles Schwab? Not a bad coach to have on your team even if others might question her methods.
When I first began learning about and living the trading life, it reminded me of baseball fandom and superstitions. I always felt a little bewildered that a community that prioritized statistics, analytics, and logic could have a magical underbelly of inexplicable traditions amongst its players and spectators alike. There are so many infamous rituals in baseball that are—often unintentionally—mirrored in trading.
Baseball: Never talk about a no-hitter while it’s in progress
Trading: Never brag about a trade until you’ve secured profit
Baseball: Refusing to wash hats, uniforms or clothes during a winning streak
Trading: Often not washing yourself, the loungewear you’ve putzed around in for a few days, or the coffee mug you are consistently refilling during a trading bender
Whether you don’t believe in superstitions or you’ve never missed Sweet Caroline with the Sox, everyone can agree that there are always matters unseen at play. Some things in life, baseball, or trading are just left up to chance. While some players blame poor performance on their lack of ritual follow through others will credit their rally to a stinky, inside out cap. In this classic “chicken vs. the egg” scenario; there are no concrete, analytical methods to prove correlation nor causation, yet people believe in them anyway.
Similar to the argument over the validity of superstitions is the classic trader argument over the validity of indicators. Some claim price action is king and all indicators lag while others claim that price action is largely driven or influenced by these same indicators. Chicken: meet egg. To quell the civil war in every classic sitcom, sport, or hobby there always has to be one outlier that seems to be universally despised, questioned, or teased, and in trading that *coveted* role belongs to the moon phase indicator.
Does it deserve all of the hate that it gets? Well, of the many natural patterns integrated into trading, one of the most well-regarded is the Fibonacci sequence. Although some may argue fibs are more technical due to their mathematical nature, others may counter that fibs essentially provide broader, more general intervals that price simply likes to range between. Uniquely enough, the moon is not a lagging indicator as its cycles and intervals are all predetermined based on previous compiled data, much like fibs. For how much the market preaches about cycles, theoretically, I am surprised there has not been more interest or research devoted to the astrological relations to trading. Conceptually, and scientifically, I can understand the doubt since little to no data has been quantified into a validated format. Much easier to study seashells than planets. Last, but not least, there is a lack of uniformity over application; mostly due to its lack of use. The moon phase indicator used here correlates local bottoms with full moons and local tops with new moons. The swings between cycles seem obvious, and I believe they are more easily seen on assets that trade 24-7 such as crypto in comparison to other markets with designated trading hours because, like the moon, the market is constantly in motion. The moon phases are like playoff beards. Everyone can grow one.. but it doesn't "look right" on every face. If you are willing to believe in superstitions, and you can't call the chicken or the egg.. why not open your mind to the moon phases? After all, part of the reason why we're drawn to the moon is its mystery. Like many trading indicators you use, you may not know the logic behind it but, "hey, if it works!".... ;-)
Whether you are bullish, bearish, or anti-goat (Go Cubs Go!), Bitcoin finds its spectators singing in the 7th inning stretch, wondering where the next 2 innings will take us. Will the the August 8th New Moon follow trend and print a local top, swinging us down to the 22nd Full Moon time where we will see a local bottom? Or, will the momentum from the July bottom (Full Moon) carry us up and into extra innings of a bull market for crypto? Unless you’re a billionaire like J.P. Morgan, whom happened to have an astrological consultant at his ready, I guess the Moon Phases indicator in Trading View will have to do.
My technical opinions on BTC are as follows:
I do not believe that BTC will surpass 50K (or hold any brief break into it) due to the primary factor of psychological resistance. In addition, the point of control within the 49s really limits a break into the upper trading range “block”. Due to certain cycles, I believe the end of March marked the high for BTC.
Statistically, I am firm in my belief that trading with the moon phases have demonstrated the best r/r opportunities for trading Bitcoin thus far. **NOTE: The tops/bottoms are not often occurring on the exact day of a new or full moon; rather, it provides a nice 3-4 day range, providing you with GREAT opportunity to scale in.** Cross reference with confluence and setups are a cake walk.
I do believe that the new moon continues to show local tops and full moons continue to show local bottoms, though sizes of the swings on previous blocks or fractals may vary. Uptrending swings (from the full moon leading up to the new moon) measure as larger movements while downward swings (from new moons to full moons) have been more mild in comparison.
Bullish Scenario:
From Jan 21 BTC has completed a pagoda pattern and has consolidated in this high 20’s/low 40’s range. You could consider the May ’21 to Aug ’21 patterns on the daily as a bullish megaphone, which would suggest that as of this weekend (PA from Aug 7-8) price has broken towards the upside. BTC is likely to retest the break, and if it can flip the low/mid range 40s as a support, I believe we see 47 or 48K with deviations into the high 49s—maybe a kiss at 50 if we turn out the rally caps.
Bearish Scenario:
BTC has been making higher highs but until recently was printing lower lows with the bodies. Untested old levels remain, but like many growth stocks (looking at you, Proctor & Gamble) it is entirely possible those levels get retested. Nonetheless, I could be wrong about the pagoda pattern being finished, with BTC wanting more retracement to the downside. Pending regulations re: crypto, the 20s may be revisited where—*SHOCKER*—like a veteran pitcher that still throws heat, big bankrolls were able to scoop it up at a bargain price.
Neutral Scenario:
BTC makes it to some conference games through the Fall (pushing the ceiling at 50K) but can’t seem to make it to October. Price ranges, slowly consolidating until the off season comes. BTC can crush some brewskis, let its figure go and hibernate for the crypto winter, maybe making one or two appearances on TV or TikTok before revisiting us in the Spring. Blame it on the GOAT.
