Will the 4Hr Death Cross cause BTC to fall 40%?
Updated
The 50 EMA is about to cross down through the 200 EMA on the 4 hour BTC chart. You may not think this is serious because after all it is only the 4 hour chart. But if you look at past occurrences of the death cross on this chart, it has triggered corrections of 10% to 60% in the past so we have to be prepared for one of this magnitude.
If you examine the 4 hour chart, the 200 EMA has acted as support for BTC since February 2019. The price would always bounce off of it if it tried to fall through. This strong support lasted 5 months until July 13th when the price fell through the 200 EMA and we got a 15% drop. This drop has pulled down the yellow 50 EMA and it is about to cross down through the purple 200 EMA forming a Death Cross. As you can surmise from the name, this is not good news for the bulls.
1) If we don't have a severe collision between the two EMA's, the price likely will move higher without any major correction. (Option "1" on the chart.)
If we do have a severe impact, I have painted 3 possible landing zones, #2, #3, #4. Zones 2 & 3 on the chart are related to support areas and the bottom zone #4 is the extreme landing zone, some 40% lower than the occurrence of the death cross. In the past we have always had a good bounce off the bottom from a death cross, so we shouldn't be down for too long if we are in a bull market.
If you don't want to hear my conspiracy theory of what happened yesterday, you can skip the rest.
I have a theory of what happened yesterday when we saw the price shoot up 15% in just minutes. Then something really weird happened. The whale refused to allow the price to fall through 10.5k for the next 13 hours. Why? I suspect he pumped the price up in order to mitigate the effect of the death cross! By pushing the price back up, it will decelerate the angle of intersection of the 2 EMAs. He kept the price above 10.5k because 10.5k is above the 50 EMA so a higher price will guide the 50 EMA higher, at least temporarily. Visualize it this way. The price is pulling on the EMA with a string. If the price is above the EMA, the price will pull the EMA higher. The higher the price is above the EMA, the stronger the pulling motion (creates a steeper EMA angle). And conversely if the price is below the EMA, the string will pull the EMA lower.
It appears to me the whale doesn't want the price to fall 40%. Instead, he is trying for a glancing blow of the two EMAs. The 50 EMA may temporarily move under the 200 EMA, but it may be just be a glancing blow and bounce back up, like a stone skipping over the still water of a pond. At least that's how I see it. We won't know for sure until the two EMA's collide and see how deep the 50 EMA passes below the 200 EMA and if the whale allows it to remain there. If the whale didn't boost the price higher yesterday, then the impact would be a lot more severe.
In a few hours we will know how severe the collision of the 2 EMAs will be. I know it would be a lot worse if it wasn't for the pump yesterday.
If you examine the 4 hour chart, the 200 EMA has acted as support for BTC since February 2019. The price would always bounce off of it if it tried to fall through. This strong support lasted 5 months until July 13th when the price fell through the 200 EMA and we got a 15% drop. This drop has pulled down the yellow 50 EMA and it is about to cross down through the purple 200 EMA forming a Death Cross. As you can surmise from the name, this is not good news for the bulls.
1) If we don't have a severe collision between the two EMA's, the price likely will move higher without any major correction. (Option "1" on the chart.)
If we do have a severe impact, I have painted 3 possible landing zones, #2, #3, #4. Zones 2 & 3 on the chart are related to support areas and the bottom zone #4 is the extreme landing zone, some 40% lower than the occurrence of the death cross. In the past we have always had a good bounce off the bottom from a death cross, so we shouldn't be down for too long if we are in a bull market.
If you don't want to hear my conspiracy theory of what happened yesterday, you can skip the rest.
I have a theory of what happened yesterday when we saw the price shoot up 15% in just minutes. Then something really weird happened. The whale refused to allow the price to fall through 10.5k for the next 13 hours. Why? I suspect he pumped the price up in order to mitigate the effect of the death cross! By pushing the price back up, it will decelerate the angle of intersection of the 2 EMAs. He kept the price above 10.5k because 10.5k is above the 50 EMA so a higher price will guide the 50 EMA higher, at least temporarily. Visualize it this way. The price is pulling on the EMA with a string. If the price is above the EMA, the price will pull the EMA higher. The higher the price is above the EMA, the stronger the pulling motion (creates a steeper EMA angle). And conversely if the price is below the EMA, the string will pull the EMA lower.
It appears to me the whale doesn't want the price to fall 40%. Instead, he is trying for a glancing blow of the two EMAs. The 50 EMA may temporarily move under the 200 EMA, but it may be just be a glancing blow and bounce back up, like a stone skipping over the still water of a pond. At least that's how I see it. We won't know for sure until the two EMA's collide and see how deep the 50 EMA passes below the 200 EMA and if the whale allows it to remain there. If the whale didn't boost the price higher yesterday, then the impact would be a lot more severe.
In a few hours we will know how severe the collision of the 2 EMAs will be. I know it would be a lot worse if it wasn't for the pump yesterday.
Note
Death Cross averted. The 50 EMA did NOT collide with the 200 EMA on the 4 Hour chart. We missed the bullet on this one. Whew!If the price stays above the 50 EMA, we don't have to worry about the Death Cross forming any time soon. The comments on the chart says it all. (Don't forget to hit the Thumbs Up button if you like the content)
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