BTC Daily RSI at these levels doesn't make sense in bull market
The daily RSI being at these levels in a bull market doesn’t make sense. There was only 1 time in bitcoin’s history where RSI was near these levels and we were in a similar phase (bull market coming out of a bear market), which was 26th October 2012. From this analysis I can only conclude 2 things, a bull and a bear case:
• Bear: If we break lower from here (i.e. below $7700) I would consider re-evaluating my long term macro view on bitcoin, and consider that the recent top of $14,000 could be a macro lower high, and that would be it for bitcoin. We will never again see prices higher than that.
• Bull: If we break $8163 (BitMEX) and get follow through past $8500 I would consider the daily lower low is in and we’ll start bouncing. I would call a bottom there at $7736 and say it will have to hold for the macro view to stay bullish. Comparing this period to Oct. 2012, I would expect institutional money to start flooding in and pump the price up like in the insane 10x run ups in 2013, which would time nicely with recession fears/economic downturn, if that happens to also happen. We ran up incredibly hard and fast from 3k to 14k, so I think that might just be a preview of whats to come, and we will see 100k a lot sooner than people think.
These are my macro long term view thoughts on the matter. Short term/trading wise I would still scale in and buy more if we drop below $7700 to catch the bounce, but I would just be selling on a lower high, and I wouldn’t be holding for the long term. I’d just keep what I bought at 3-4k with a stop below 3k. If we fall below 3k here it’s goodnight bitcoin.
I could be drawing conclusions far too big from just the daily RSI, but it just doesn't make sense to me. I think it’s extremely strange that the RSI is where it is in a bull trend, given bitcoin’s past history.
• Bear: If we break lower from here (i.e. below $7700) I would consider re-evaluating my long term macro view on bitcoin, and consider that the recent top of $14,000 could be a macro lower high, and that would be it for bitcoin. We will never again see prices higher than that.
• Bull: If we break $8163 (BitMEX) and get follow through past $8500 I would consider the daily lower low is in and we’ll start bouncing. I would call a bottom there at $7736 and say it will have to hold for the macro view to stay bullish. Comparing this period to Oct. 2012, I would expect institutional money to start flooding in and pump the price up like in the insane 10x run ups in 2013, which would time nicely with recession fears/economic downturn, if that happens to also happen. We ran up incredibly hard and fast from 3k to 14k, so I think that might just be a preview of whats to come, and we will see 100k a lot sooner than people think.
These are my macro long term view thoughts on the matter. Short term/trading wise I would still scale in and buy more if we drop below $7700 to catch the bounce, but I would just be selling on a lower high, and I wouldn’t be holding for the long term. I’d just keep what I bought at 3-4k with a stop below 3k. If we fall below 3k here it’s goodnight bitcoin.
I could be drawing conclusions far too big from just the daily RSI, but it just doesn't make sense to me. I think it’s extremely strange that the RSI is where it is in a bull trend, given bitcoin’s past history.
Trade active
Looking at this chart again, I have realised the best way to determine if we are going back into a bear market:In previous bull markets, the RSI dipping into oversold on the daily timeframe has always been the best buying opportunity you could ask for.
The difference with previous bear markets is simple: The low created by the first daily oversold conditions has always broken.
If you ensure your entry price is sufficiently close to the low (such as when scaling into an oversold bounce) Then placing a stop below that low after the bounce has taken place should ensure low level of risk.
Trade closed: target reached
In the end BTC did break the low of $7700 but did not get much follow through. The dip was quickly bought which has formed a nice wick on the current weekly candle. I took my own analysis here with a pinch of salt purely due to the extreme strength we saw in the run up from 3k to 14k. I should have stated that a weekly close below the first low that creates daily oversold conditions would indicate we have entered a bear market. Instead, this was all just a great buying opportunityThe current low of $7300 coincides nicely with the 0.618 fib retracement level as shown on the chart below. I expect to see prices over 10k sometime soon.
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