Bitcoin's Bottom & Trend Analysis
This overview is purely a market trend analysis. This not an analysis saying we are only going up from here. Also, this analysis is done on Bitstamp, checking the other markets as I wrote this, the points I show are visible on the other major exchanges.
We are seeing a few very important bullish signs for the first time throughout this correction. However, this does not mean the market is at it's bottom. The weekly close around 16 hours ago left a clear bearish engulfing candle that wiped away 3 weeks of bullish progress.
What is visible to me is a few high time frame divergences that show the beginning of the shift from bearish momentum to bullish. Keep in mind these are what becomes visible when the shift from sell pressure in a trend shifts to bull pressure and the demand out paces the supply. When the sell pressure breaks is when we begin to see a clear and visible bull market.
Starting out, lets look at volume. We have a total of 4 support touches, each one is slightly higher on the close but generally within the bottoms range.
The first one in pink, On Balance Volume (O.B.V.) levels bottomed at approximately the same place we see with current levels. The second pink marker shows what has turned out to be the low on the O.B.V.. I left the Chaikin Money Flow (C.M.F.) on to show that even though we touched support again, the C.M.F. remains in the bullish pressure zone ever so slightly. This spike in buy pressure and ability to remain in the positive flow tells me the correction is taking a new direction shortly.
Moving forward to the first yellow arrow on the left, price action found a lower bottom with a slightly higher O.B.V. level. Since then we have generally not dipped below the price range of $5,800 to $6,300ish on support touches and the O.B.V. continues to climb.
The Stochastic shows me a couple interesting things. I could call this divergence a number of ways, I would've like to see %K (Blue line) touch the pink arrow to call this a nice exaggerated divergence favoring the bulls. Regardless, it is a tad bit confluent at that very point which leads me to defer to the bigger bullish signal starting on our first yellow arrow.
The Relative Strength Index (R.S.I.) shows a very similar story as the STOCH.
Lastly, the Momentum (M.O.M.) indicator. I have paired the M.O.M. indicator with a moving average (Pink) set at 14 periods.
The last support touch marked by the yellow arrow shows the M.O.M. touching the Moving Average and bouncing off it perfectly to up above the median line of zero. We are currently below the median line, but above the Moving Average indicating the momentum is slowly shifting to a more bullish stance.
Conclusion
Keep in mind this is an analysis of the current trend and its strength. This is not specifying where the bottom is, I will be doing a part 2 for this analysis at a later time.
Believe it or not the bearish momentum is getting weaker. Taking a look at the Guppy Multiple Moving Average (GMMA) we are seeing bunching of the EMA's indicating a bottom forming. We also see the Volume Profile (VPVR) showing this area as our value area. This means little as for a markets bottom, but it is a plus when measuring volume at price levels instead of time analysis.
The bottom is still forming, but good news is we can now see the formation and take this into account as I make my day trades. We have a long way to go before we see a strong bull push similar to last years. The Ichimoku will be very useful for measuring where our full blown bull will break out at. I am watching for a Kumo cloud break on the weekly to know when all the rest of the world will be FOMOing into Bitcoin and push those impulses to insane levels again.
As we form a bottom, all the dips and rallies are just noise. As long as market structure does not change, then I expect a lot of sideways action for a couple months to properly form this bottom that will ultimately lead to an obnoxiously profitable bull rally.
Thank you for reading and please be sure to click like on this analysis. Thank You!
This is not financial advice, this is simply my personal analysis of the current conditions.
We are seeing a few very important bullish signs for the first time throughout this correction. However, this does not mean the market is at it's bottom. The weekly close around 16 hours ago left a clear bearish engulfing candle that wiped away 3 weeks of bullish progress.
What is visible to me is a few high time frame divergences that show the beginning of the shift from bearish momentum to bullish. Keep in mind these are what becomes visible when the shift from sell pressure in a trend shifts to bull pressure and the demand out paces the supply. When the sell pressure breaks is when we begin to see a clear and visible bull market.
Starting out, lets look at volume. We have a total of 4 support touches, each one is slightly higher on the close but generally within the bottoms range.
The first one in pink, On Balance Volume (O.B.V.) levels bottomed at approximately the same place we see with current levels. The second pink marker shows what has turned out to be the low on the O.B.V.. I left the Chaikin Money Flow (C.M.F.) on to show that even though we touched support again, the C.M.F. remains in the bullish pressure zone ever so slightly. This spike in buy pressure and ability to remain in the positive flow tells me the correction is taking a new direction shortly.
Moving forward to the first yellow arrow on the left, price action found a lower bottom with a slightly higher O.B.V. level. Since then we have generally not dipped below the price range of $5,800 to $6,300ish on support touches and the O.B.V. continues to climb.
The Stochastic shows me a couple interesting things. I could call this divergence a number of ways, I would've like to see %K (Blue line) touch the pink arrow to call this a nice exaggerated divergence favoring the bulls. Regardless, it is a tad bit confluent at that very point which leads me to defer to the bigger bullish signal starting on our first yellow arrow.
The Relative Strength Index (R.S.I.) shows a very similar story as the STOCH.
Lastly, the Momentum (M.O.M.) indicator. I have paired the M.O.M. indicator with a moving average (Pink) set at 14 periods.
The last support touch marked by the yellow arrow shows the M.O.M. touching the Moving Average and bouncing off it perfectly to up above the median line of zero. We are currently below the median line, but above the Moving Average indicating the momentum is slowly shifting to a more bullish stance.
Conclusion
Keep in mind this is an analysis of the current trend and its strength. This is not specifying where the bottom is, I will be doing a part 2 for this analysis at a later time.
Believe it or not the bearish momentum is getting weaker. Taking a look at the Guppy Multiple Moving Average (GMMA) we are seeing bunching of the EMA's indicating a bottom forming. We also see the Volume Profile (VPVR) showing this area as our value area. This means little as for a markets bottom, but it is a plus when measuring volume at price levels instead of time analysis.
The bottom is still forming, but good news is we can now see the formation and take this into account as I make my day trades. We have a long way to go before we see a strong bull push similar to last years. The Ichimoku will be very useful for measuring where our full blown bull will break out at. I am watching for a Kumo cloud break on the weekly to know when all the rest of the world will be FOMOing into Bitcoin and push those impulses to insane levels again.
As we form a bottom, all the dips and rallies are just noise. As long as market structure does not change, then I expect a lot of sideways action for a couple months to properly form this bottom that will ultimately lead to an obnoxiously profitable bull rally.
Thank you for reading and please be sure to click like on this analysis. Thank You!
This is not financial advice, this is simply my personal analysis of the current conditions.
All posts are for educational purposes and are simply my views of markets conditions.
Please do your own research and use my content to educate yourself.
Please do your own research and use my content to educate yourself.
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.