BitcoinShort
BITCOIN: Proof That The Volatile Days Are Over -- For Now
Updated
Long time, no chat. It's been a minute, TradingView, and for a few reasons:
1) I was on vacation from late June to early July. That meant time away from technical analysis.
2) The market was predictably down, and there was little of interest to discuss.
3) Even the fundamentals and news weren't really making things interesting for technical analysis.
4) I resumed my freelance work, which generally runs from August to May.
Well, now I am back, and I'm here to discuss the evidence that Bitcoin has evened out. Does that mean we will next have a big move up, or will there be another big move down? I think the answers lies within the rumors, news and fundamentals -- just like in any speculative market. But no matter the case, I think it's obvious that Bitcoin has settled. The days of volatility are over, for now at least.
Let's look at the daily Bitcoin chart on Coinbase. Note that I have annotated a few things. FIRST, the blue line indicates the slope between the Volume-Weighted Moving Average (VWMA) lows of September 17 (2017) and June 28. I have also included blue hashed lines to show the 6.4% upper and lower bounds to establish a range for which Bitcoin has established as its temporary "bottom" over the past 11+ months. SECOND, I have noted each occasion of which the RSI dropped below 30 or approached 30 (at 30-32) within the last four downward trends that make up the bear market in 2018. Also annotated are the VWMA's within the incumbent five days of the noted RSI approaches/arrivals. I did this to see if each low kept getting lower. THIRD, I used pink and purple slopes to connect lows during downtrend trend periods (pink) while comparing the troughs of each decline (purple). I did this to track the ferocity of price declines in each downward trend while also see if a true bottom is coming near. I also did this to see if each low kept getting lower.
If we put these findings within the context of the daily Bitcoin movement, it seems apparent that the price action is settling. Since August 5, Bitcoin has not surpassed $7163.00 or dropped below $5900.00 on Coinbase. This quite the flat dynamic for a 24-day period in the crypto world. Note that it is NOT the flattest BTC has been, even within the past quarter. Bitcoin actually held within a 1.1K range between June 11 and July 16. However, this sideways trend sticks out more to me than the previous one.
If we were to include RSI approaches/arrivals for the overbought half, we'd have the following VWMA turning points:
> $18639.55 peak on 12/18 (2017) with overbought RSI arrival
> $7595.06 trough on 2/5 with oversold RSI arrival (down $11044.49 in 49 days -- $225.40 average)
> $11198.61 peak on 3/5 with no RSI arrival/approach (up $3603.55 in 28 days -- $128.70 average)
> $6945.82 trough on 4/2 with oversold RSI approach (down $4252.79 in 28 days -- $151.89 average)
> $9174.13 peak on 4/28 with overbought RSI approach (up $2228.31 in 26 days -- $85.70 average)
> $6102.79 trough on 6/28 with three successive oversold RSI arrivals/approaches (down $3071.34 in 61 days -- $50.35 average)
> $8196.16 peak on 7/28 with overbought RSI arrival (up $2093.37 in 30 days -- $69.78 average)
> $6320.66 trough on 8/12 with oversold RSI approach (down $1875.50 in 15 days -- $125.03 average)
The peaks and troughs have been covering less vertical distance over time, and they also had slower a progression or regression rate over time in a non-successive turn, until this very last one. However, since the last trough, the Bitcoin VWMA has yet to even surpass 7K, and the RSI is already near 60. So it seems like the most recent turn is not the start a new trend. In fact, the trend seems to say we're getting closer to a flat slope. Why? It seems like less is needed to get the RSI to an overbought or oversold status, and that is a sign that the price is getting less volatile.
To close, I will note that the previous two times BTC was "flat" this year, it followed with a brief bull run. This includes my very successful call in early April to be on alert to buy. I'll also add in the note that the blue trendline channel already held up twice since the June 28 low. Finally, the VWMA lows from June 28 to August 12 actually produced an upward slope, which suggests the downward movement may have already died out. These three little things have me feeling slightly bullish for now. However, given the quick bite of the most recent peak-to-trough downward trend, I am not going to outright suggest a BUY at this time. (Disclosure: I bought BTC on 8/16, with the intent to trade for alts and later swing for a future BTC sell. Some of those alt buys have paid off handsomely within the past two weeks. However, I have no short-term expectations for a profitable BTC sell at this moment.)
For now, stay tuned. If the VWMA leaves the blue trendline channel, I'd like to see if the RSI approaches or arrives at an overbought status. The "peak" in that instance may tell us a lot more about what's to come for Bitcoin in the near future.
1) I was on vacation from late June to early July. That meant time away from technical analysis.
2) The market was predictably down, and there was little of interest to discuss.
3) Even the fundamentals and news weren't really making things interesting for technical analysis.
4) I resumed my freelance work, which generally runs from August to May.
Well, now I am back, and I'm here to discuss the evidence that Bitcoin has evened out. Does that mean we will next have a big move up, or will there be another big move down? I think the answers lies within the rumors, news and fundamentals -- just like in any speculative market. But no matter the case, I think it's obvious that Bitcoin has settled. The days of volatility are over, for now at least.
Let's look at the daily Bitcoin chart on Coinbase. Note that I have annotated a few things. FIRST, the blue line indicates the slope between the Volume-Weighted Moving Average (VWMA) lows of September 17 (2017) and June 28. I have also included blue hashed lines to show the 6.4% upper and lower bounds to establish a range for which Bitcoin has established as its temporary "bottom" over the past 11+ months. SECOND, I have noted each occasion of which the RSI dropped below 30 or approached 30 (at 30-32) within the last four downward trends that make up the bear market in 2018. Also annotated are the VWMA's within the incumbent five days of the noted RSI approaches/arrivals. I did this to see if each low kept getting lower. THIRD, I used pink and purple slopes to connect lows during downtrend trend periods (pink) while comparing the troughs of each decline (purple). I did this to track the ferocity of price declines in each downward trend while also see if a true bottom is coming near. I also did this to see if each low kept getting lower.
If we put these findings within the context of the daily Bitcoin movement, it seems apparent that the price action is settling. Since August 5, Bitcoin has not surpassed $7163.00 or dropped below $5900.00 on Coinbase. This quite the flat dynamic for a 24-day period in the crypto world. Note that it is NOT the flattest BTC has been, even within the past quarter. Bitcoin actually held within a 1.1K range between June 11 and July 16. However, this sideways trend sticks out more to me than the previous one.
If we were to include RSI approaches/arrivals for the overbought half, we'd have the following VWMA turning points:
> $18639.55 peak on 12/18 (2017) with overbought RSI arrival
> $7595.06 trough on 2/5 with oversold RSI arrival (down $11044.49 in 49 days -- $225.40 average)
> $11198.61 peak on 3/5 with no RSI arrival/approach (up $3603.55 in 28 days -- $128.70 average)
> $6945.82 trough on 4/2 with oversold RSI approach (down $4252.79 in 28 days -- $151.89 average)
> $9174.13 peak on 4/28 with overbought RSI approach (up $2228.31 in 26 days -- $85.70 average)
> $6102.79 trough on 6/28 with three successive oversold RSI arrivals/approaches (down $3071.34 in 61 days -- $50.35 average)
> $8196.16 peak on 7/28 with overbought RSI arrival (up $2093.37 in 30 days -- $69.78 average)
> $6320.66 trough on 8/12 with oversold RSI approach (down $1875.50 in 15 days -- $125.03 average)
The peaks and troughs have been covering less vertical distance over time, and they also had slower a progression or regression rate over time in a non-successive turn, until this very last one. However, since the last trough, the Bitcoin VWMA has yet to even surpass 7K, and the RSI is already near 60. So it seems like the most recent turn is not the start a new trend. In fact, the trend seems to say we're getting closer to a flat slope. Why? It seems like less is needed to get the RSI to an overbought or oversold status, and that is a sign that the price is getting less volatile.
To close, I will note that the previous two times BTC was "flat" this year, it followed with a brief bull run. This includes my very successful call in early April to be on alert to buy. I'll also add in the note that the blue trendline channel already held up twice since the June 28 low. Finally, the VWMA lows from June 28 to August 12 actually produced an upward slope, which suggests the downward movement may have already died out. These three little things have me feeling slightly bullish for now. However, given the quick bite of the most recent peak-to-trough downward trend, I am not going to outright suggest a BUY at this time. (Disclosure: I bought BTC on 8/16, with the intent to trade for alts and later swing for a future BTC sell. Some of those alt buys have paid off handsomely within the past two weeks. However, I have no short-term expectations for a profitable BTC sell at this moment.)
For now, stay tuned. If the VWMA leaves the blue trendline channel, I'd like to see if the RSI approaches or arrives at an overbought status. The "peak" in that instance may tell us a lot more about what's to come for Bitcoin in the near future.
Note
2018-08-31, 11:50pm ESTThe daily RSI still hasn't surpassed 60 yet, but I do want to talk about what COULD lay ahead if RSI approaches an overbuy. The 200-day VWMA (shown with the thin dark blue line) has long been out of the picture in terms of technical analysis for Bitcoin. However, it might soon come back into the picture.
The March 7 candle cut right through any resistance that the 200-day VWMA provided, and then the March 8 candle confirmed that Bitcoin would stay under. Since then, the price has been well below the 200-day VWMA.
Obviously, with a 200-day time frame, the indicator can be quite delayed, so to say. The line peaked around 11.1K from June 5 to June 21, and then it sharply dropped shortly after that. Right now, the average seems to be settling around 8.2K, which makes for a very interesting case if Bitcoin's RSI eventually approaches 70 and reaches "overbuy" status.
With the 5-day VWMA currently just edging 7K, after bottoming out slightly over 6.3K already 19 days ago, it seems like 8.2K might not be attainable within a normal RSI. However, expect the 200-day VWMA to continue to drop, as the inverse H&S pattern from February continues to be wiped out from the equation. (The current time frame for 200 days goes back to February 13. By the next 19 days, the next shoulder will be out of the equation, and the failed inverse H&S breakthrough will be the next to be eliminated.)
Within 3-4 weeks, I expect the 200-day VWMA to fall under 8K. Meanwhile, Bitcoin could be pushing somewhere between 7.7K and 8K if it continues a path towards being overbought.
This scenario may mark a crossroads for Bitcoin for the rest of 2018. Personally, I expect the next RSI overbuy approach/arrival to coincide with a rejection at the 200-day VWMA. However, THAT MAY WEAKEN THE RESISTANCE AT 200-DAY VWMA, which could open a run past and above the line in the near future. This is pure speculation, but how does another December bull run sound?
That's at least what is legitimately possible if the rumors, news and fundamentals align up favorably with the technical analysis and investor confidence.
Once again, keep your eyes open and stay tuned.
Note
2018-09-05, 11:10pm ESTWhat a nasty candle that just got confirmed three hours ago. Given the recent movement, this one came as a huge surprise from a technical standpoint. However, there MIGHT have been something brewing. Report came out Sunday of a big rise in shorts (ccn.com/despite-shorts-rising-rapidly-bitcoin-price-secures-7200-tokens-bleed-out/), today's action seemed to come with questions from AI (ccn.com/unsual-cryptocurrency-market-behavior-before-big-crypto-drop/). It seems like speculation will win out on this harsh dip.
Of course, there are more important matters at stake. Namely, have we eschewed the RSI overbuy approach for a new RSI oversell approach? And if so, does it create a new Bitcoin bottom?
I do NOT like this development from a short bull's perspective. But once again, we must let things play out before making a move. All said, we're still in the blue trendline range.
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