Quick post to address BTCs expected potential first major pull back into this bull run period...
BULL MARKET PULL BACKS
Historically, BTC during its bull market enjoys pull back which ranged from 15% to as much as 30%-40% in prior markets. This is essential for trader participants in the market to take profits, allow BTC to retest low levels and prove new heights are sustainable before ranging to new higher price levels.
The first pull back historically for BTC post the start of the 'Bull Run' phase of BTCs 4 year cycle is traditionally the largest pull back opportunity and historically been the best short term buying opportunity in the Bull Run (NOT FINANCIAL ADVICE).
We can expect a 30-40% correction for this pull back based on historic bull market period examples (Let me know in the comments below if you would like me to detail consistent price behaviour during BTC bull run periods in a future post).
ARE WE AT THIS POINT NOW OF THE CYCLE? WHAT ARE THE INDICATORS SAYING?
As highlighted by the RED arrow on the chart, a number of the indicators like to monitor on the weekly chat are suggesting bearish divergences and fading momentum exists with the current price action. This is calling for a cooling off period of the market.
CME GAP
Historically, BTC has had a tendency to want to 'close' open gap, created by weekend trading of BTC that does not align with equities that follow the traditional 'No Trading' over the weekend policy of Traditional Financial instruments. Hence crypto ETFs which align with these policies (such as the CME Futures chart as seen in this chart) can create 'GAP' between the open (Monday) and close (Friday) candles.
To understand CME gaps, please take the time to review the details discussion in the earlier post.
The orange BOX shows the below CME gap target that BTC price may range towards to close.
NOTE: this box has been listed as Partially Closed as the open Monday candle of the gap did go below before rising during the weekly candle but did no dip past the close of the previous weekly candle.
21W EMA & 20W SMA
Historically, a fully developed healthy bull market for BTC has required periodic retesting and holding of these moving averages. A close of the CME gap at this point of the market would also satisfy this historic trend for BTC.
ORANGE TREND LINE
Bears if eager to continue the 'close the CME gap' trend will need to convince the market by first exceeding the orange trend line. Currently this allows BTC to complete a 10 to 12% correction while also taking the price below the key psychological 100K price level, without phasing the bulls conviction to charger higher.
* Holding the Orange Trend Line Scenario: we want to see price bounce and conviction from the bulls to push BTC to higher highs. The goal for Bears would be to achieve the measured move up to 180K. This would most potentially shorted the bull run (time prospective) and potentially cap our ATH for this cycle early; creating a distribution zone similar to the 2021 cycle top.
* Breaking below the Orange Trend Line Scenario: If we break the Orange Trend Line then Bulls will concede ground to the MA levels (allowing the CME gap to also close). Bulls will write this off as a market reset and holding support at these levels will entice Traders to take positions needed to drive BTC up sustainably to the next higher level(s).
Losing the MAs would ask serious questions to the intent of BULLs and the sustainability of the market moving forward this bull run.....
BULL MARKET PULL BACKS
Historically, BTC during its bull market enjoys pull back which ranged from 15% to as much as 30%-40% in prior markets. This is essential for trader participants in the market to take profits, allow BTC to retest low levels and prove new heights are sustainable before ranging to new higher price levels.
The first pull back historically for BTC post the start of the 'Bull Run' phase of BTCs 4 year cycle is traditionally the largest pull back opportunity and historically been the best short term buying opportunity in the Bull Run (NOT FINANCIAL ADVICE).
We can expect a 30-40% correction for this pull back based on historic bull market period examples (Let me know in the comments below if you would like me to detail consistent price behaviour during BTC bull run periods in a future post).
ARE WE AT THIS POINT NOW OF THE CYCLE? WHAT ARE THE INDICATORS SAYING?
As highlighted by the RED arrow on the chart, a number of the indicators like to monitor on the weekly chat are suggesting bearish divergences and fading momentum exists with the current price action. This is calling for a cooling off period of the market.
CME GAP
Historically, BTC has had a tendency to want to 'close' open gap, created by weekend trading of BTC that does not align with equities that follow the traditional 'No Trading' over the weekend policy of Traditional Financial instruments. Hence crypto ETFs which align with these policies (such as the CME Futures chart as seen in this chart) can create 'GAP' between the open (Monday) and close (Friday) candles.
To understand CME gaps, please take the time to review the details discussion in the earlier post.
The orange BOX shows the below CME gap target that BTC price may range towards to close.
NOTE: this box has been listed as Partially Closed as the open Monday candle of the gap did go below before rising during the weekly candle but did no dip past the close of the previous weekly candle.
21W EMA & 20W SMA
Historically, a fully developed healthy bull market for BTC has required periodic retesting and holding of these moving averages. A close of the CME gap at this point of the market would also satisfy this historic trend for BTC.
ORANGE TREND LINE
Bears if eager to continue the 'close the CME gap' trend will need to convince the market by first exceeding the orange trend line. Currently this allows BTC to complete a 10 to 12% correction while also taking the price below the key psychological 100K price level, without phasing the bulls conviction to charger higher.
* Holding the Orange Trend Line Scenario: we want to see price bounce and conviction from the bulls to push BTC to higher highs. The goal for Bears would be to achieve the measured move up to 180K. This would most potentially shorted the bull run (time prospective) and potentially cap our ATH for this cycle early; creating a distribution zone similar to the 2021 cycle top.
* Breaking below the Orange Trend Line Scenario: If we break the Orange Trend Line then Bulls will concede ground to the MA levels (allowing the CME gap to also close). Bulls will write this off as a market reset and holding support at these levels will entice Traders to take positions needed to drive BTC up sustainably to the next higher level(s).
Losing the MAs would ask serious questions to the intent of BULLs and the sustainability of the market moving forward this bull run.....
Note
See the companion follow up post below on the daily for additional clarity:
Trade closed: target reached
A Quick update on this post.... While the monthly candle close was horrible; the weekly candle has recovered price back into our consolidation channel (a little later than we would have liked to see this reflected in the monthly close).As discussed in this post, BTC did fall to almost 100% close the identified CME gap. BTC does not have a 100% track record in closing all gaps, however did eventuate ‘so far’ with a partial close this pull back (drop to 78.6k, CME GAP $81.2k - 77.3k).
Expect to see a bit of down before up if bulls do follow through from here.... Bulls have pushed us above the 20W SMA / 21W EMA so a confirmation and hold as support is the first point of call IMO for bulls to convince the market in the short term.
The challenge for bulls in March is we want to see bulls deal with this horrible monthly candle close, and prove to the market that over sold indicators are not a topping sign but a conformation of a bubbly / frothy over extended market that is ripe for a blow off top phase and has more to give before down...
March we want to see bulls prove to the market that we are entering into the business end of the bull run and not confirmation of a lack luster distribution phase...
Note
Daily Close Retesting 20W Moving Average as we speak. Lets see if Bulls can hold the line 🍿
Note
Ironically, in closing the previously identified CME GAP discussed in this post an even larger CME gap was created (see below).Currently in the process of closing this also!
Note
MARKET VOLATILITYBitcoin has experienced the expected volatility discussed at the beginning of this post (media have branded the reason for this on):
* US Crypto Federal Reserve Tweets
* US Tariffs (Canada & Mexico Start)
CME GAPS
Technically BTC has close 3 CME Gaps over this volatile period:
* Price Down - Original CME GAP @ ~$78.2k ~$81.3k (Partial Close)
* Price Up - Recently created CME GAP @ ~$93.7k ~$81.3k (Full Close)
* Price Down - Instantly created CME GAP @ ~$95.0k ~$84.9k (Full Close)
This will hopefully satisfy the short-term Bulls and Bears and medium-term Bears.
DAILY CLOSE RECOVERY
Now this volatility period has played out, medium and long term Bulls can focus on price momentum repair. The short-term daily targets for Bulls with the up coming daily close are listed below:
BULL RUN PRICE ACTION
BULLs - looking at this consolidation period now have their spring in place. We want to see follow through from the bulls, pushing price up to new levels from here if we are to see recovery. Bulls have their opportunity now in place for Bull run continuation and confirmation the market cycle still has more to come.
BEARs - have already retested and held as resistance the lower levels of our consolidation channel around the 92K level and will use this to point out market momentum has swung to the Bears favor. Bulls need to break back into the consolidation and hold this level as support to invalidate this thesis with coming candles. Bears need to show follow through and more than a sweep of the lows to convince the market cycle momentum has changed.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.