Why I think Bitcoin has bottomed Part 2
Hi guys,
So lets keeps things rolling as we continue to build a case on why we have bottomed at the 17k range
I have added on the weekly bitcoin chart 3 very simple moving averages that have played and shown in the past quite a lot of history, namely the weekly 50 MA / 200 MA / 300 MA.
If we look where in the past we have bottomed out whenever we broke the 50MA we tapped the 200MA for a bounce, if we broke the 200MA, we tapped or nearly tapped the 300 MA.
In this case you can see very similar as in March 2020 with the big crash, we also went down to the 300 MA once again. Could this be a coincidence? Obviously personally I think not.
Further along, we are forming a falling wedge on both the RSI as well as on the Price, marked in the white dotted lines, which has a higher probability for breaking upwards and not downwards.
If we would take a measured move from that wedge, in case we break out, our targets would be 47.6k / 63.4k / 73.1k which falls in line with the bounces that I have in mind.
Once again, I think we are forming an ABCDE triangle, which is why I keep talking about a new ATH but a more shallow one around that top range of 74k, but we could of course, we can just make a dead cat bounce as well
towards 47k range and drop down from there, which would invalidate the triangles and would be super bearish for BTC to be honest, but once again, we can't really judge things until we get further along the next few month.
As a trader I just keep my options open and adjust accordingly along the way, and for now the probability that we move up is a lot higher than going down, until I see lower lows getting made obv. Risk management is always key.
So what else? Everyone is talking about the Dollar index going up, Natural Gas going up, US crude Oil prices keep going up. Which is true. That's basically where most people are being so super bearish as well as the quantitative tightening policy.
However, if you have been checking the charts form DXY, NGN, CLN you can see bearish divergences are building onto mid timeframes and structures are all looking like rising wedged (which have higher probability to break down).
So whilst everyone is saying they will keep going up, I am personally saying they will break down rather, and although divergences can take a long time to play out, they will play out eventually. So I am seeing bullish divergence,
and falling wedge on BTC, whilst rising wedges and bearish divergence on the things all people are saying affects our global economy. So could that turn and make things bullish for BTC once they truly break down? I think so.. and I think it will happen
faster than most expect as the market will always leave you behind and is more irrational than you might think.
Another thing I want to point out is the COT chart (commitments of traders), which indicates us the following.. professional traders hardcore up long since the crash, institutional traders, were slower to react but picking up a lot of pace right now
to also go into long positions... the only people who are shorting apparently is retail traders. So which team do you think is going to win? I personally side along with the pros in this case.. but of course they have been wrong before as well :)
Fear and Greed index have peaked in the fear area at 6, a single digit number which typically historically always has been a good bottom or buy opportunity.
Let's talk hash ribbons, with the price being so low, we are in a miner's capitulation phase, which means a lot of miners are unable to sustain their mining costs with the rewards they are getting, hence we get a miners capitulation phase where
a lot of miners will sell their BTC and give up on mining. Similar like in all businesses, once they give up, others will take their place if the market sustains. Which we have this amazing self-regulation fundamental mechanism on Bitcoin
which is called mining difficulty adjustment. If there is a low amount, the difficulty becomes lower, making it easier to gain more rewards, whilst adjustment of the difficulty goes up higher, when there are too many players in the mining market.
This system basically let's the market do its thing and makes everything self-regulatory. Which is truly an amazing thing to see work out time and time again.
So once expensive high cost or non effective miners are out, the cheaper and more effective ones will take over their spot or new players will come in and fill out the empty spots.
So if you want to be more sure about a good entry or bottoming price spot, you can wait for the magical blue buy signal on the hash ribbons, and although that signal has been always accurate, it has always been a delayed signal as well.
(but definitely not a bad one to enter as well)
Will end things here for today... more to continue in the next few days
-The Dang Oracle
So lets keeps things rolling as we continue to build a case on why we have bottomed at the 17k range
I have added on the weekly bitcoin chart 3 very simple moving averages that have played and shown in the past quite a lot of history, namely the weekly 50 MA / 200 MA / 300 MA.
If we look where in the past we have bottomed out whenever we broke the 50MA we tapped the 200MA for a bounce, if we broke the 200MA, we tapped or nearly tapped the 300 MA.
In this case you can see very similar as in March 2020 with the big crash, we also went down to the 300 MA once again. Could this be a coincidence? Obviously personally I think not.
Further along, we are forming a falling wedge on both the RSI as well as on the Price, marked in the white dotted lines, which has a higher probability for breaking upwards and not downwards.
If we would take a measured move from that wedge, in case we break out, our targets would be 47.6k / 63.4k / 73.1k which falls in line with the bounces that I have in mind.
Once again, I think we are forming an ABCDE triangle, which is why I keep talking about a new ATH but a more shallow one around that top range of 74k, but we could of course, we can just make a dead cat bounce as well
towards 47k range and drop down from there, which would invalidate the triangles and would be super bearish for BTC to be honest, but once again, we can't really judge things until we get further along the next few month.
As a trader I just keep my options open and adjust accordingly along the way, and for now the probability that we move up is a lot higher than going down, until I see lower lows getting made obv. Risk management is always key.
So what else? Everyone is talking about the Dollar index going up, Natural Gas going up, US crude Oil prices keep going up. Which is true. That's basically where most people are being so super bearish as well as the quantitative tightening policy.
However, if you have been checking the charts form DXY, NGN, CLN you can see bearish divergences are building onto mid timeframes and structures are all looking like rising wedged (which have higher probability to break down).
So whilst everyone is saying they will keep going up, I am personally saying they will break down rather, and although divergences can take a long time to play out, they will play out eventually. So I am seeing bullish divergence,
and falling wedge on BTC, whilst rising wedges and bearish divergence on the things all people are saying affects our global economy. So could that turn and make things bullish for BTC once they truly break down? I think so.. and I think it will happen
faster than most expect as the market will always leave you behind and is more irrational than you might think.
Another thing I want to point out is the COT chart (commitments of traders), which indicates us the following.. professional traders hardcore up long since the crash, institutional traders, were slower to react but picking up a lot of pace right now
to also go into long positions... the only people who are shorting apparently is retail traders. So which team do you think is going to win? I personally side along with the pros in this case.. but of course they have been wrong before as well :)
Fear and Greed index have peaked in the fear area at 6, a single digit number which typically historically always has been a good bottom or buy opportunity.
Let's talk hash ribbons, with the price being so low, we are in a miner's capitulation phase, which means a lot of miners are unable to sustain their mining costs with the rewards they are getting, hence we get a miners capitulation phase where
a lot of miners will sell their BTC and give up on mining. Similar like in all businesses, once they give up, others will take their place if the market sustains. Which we have this amazing self-regulation fundamental mechanism on Bitcoin
which is called mining difficulty adjustment. If there is a low amount, the difficulty becomes lower, making it easier to gain more rewards, whilst adjustment of the difficulty goes up higher, when there are too many players in the mining market.
This system basically let's the market do its thing and makes everything self-regulatory. Which is truly an amazing thing to see work out time and time again.
So once expensive high cost or non effective miners are out, the cheaper and more effective ones will take over their spot or new players will come in and fill out the empty spots.
So if you want to be more sure about a good entry or bottoming price spot, you can wait for the magical blue buy signal on the hash ribbons, and although that signal has been always accurate, it has always been a delayed signal as well.
(but definitely not a bad one to enter as well)
Will end things here for today... more to continue in the next few days
-The Dang Oracle
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