When Will It Drop??? Buying Near Moving Averages
Updated
Since my last post, the cryptocurrency market has continued to charge along without making any extensive correction. Even if the market is entering a new bullish cycle, it's important to remember that harsh 30-40% corrections can occur at any point. Right now, both the total market cap and the total altcoin market cap are in really tough resistance areas, as clearly shown on my charts. These are important levels for the market to break in order to confirm long term bullish price appreciation.
Given the market is in a sensitive area, I would not be surprised to see a large retrace soon, as shown in the righthand chart, before any continuation higher. So I'd be prepared for a test of the 100 day MA (green) for both indexes. Of course, this may just not happen yet. Back when Bitcoin was below 10K, I noted the possibility of a big shakeout below 8K, but also mentioned that it might not materialize. It's very hard to predict (or bet on) sizable pullbacks during a bull market. I think it's most important to look at horizontal levels and moving averages.
The point here would be NOT to sell any long term positions here, but buy on a pullback to the 100 day Moving Average (green) or below. This occurred numerous times during the previous bull run. There was even a test of the 200 day MA early on. Moving Averages are important because they prove to market participants that people are optimistic about price. Buying at MA's shows confidence in the market, since the assumption is that the price should stay above the long term average, at least until the end of the current new cycle.
Swing trading is fun, but should only be done with a small portion of the long term portfolio. The goal would be to add on a sizable dip. But the dip might not occur until prices reach the higher resistance levels, noted on these charts. The bullish targets (green) are based on previously broken long term trends (light blue) and important horizontal levels from the previous bull market. In the event that these targets are reached sooner rather than later, I'll reassess the market based on how all the indicators are looking.
This is not financial advice! This is meant for education, speculation, and entertainment only. Enjoy!
-Victor Cobra
Given the market is in a sensitive area, I would not be surprised to see a large retrace soon, as shown in the righthand chart, before any continuation higher. So I'd be prepared for a test of the 100 day MA (green) for both indexes. Of course, this may just not happen yet. Back when Bitcoin was below 10K, I noted the possibility of a big shakeout below 8K, but also mentioned that it might not materialize. It's very hard to predict (or bet on) sizable pullbacks during a bull market. I think it's most important to look at horizontal levels and moving averages.
The point here would be NOT to sell any long term positions here, but buy on a pullback to the 100 day Moving Average (green) or below. This occurred numerous times during the previous bull run. There was even a test of the 200 day MA early on. Moving Averages are important because they prove to market participants that people are optimistic about price. Buying at MA's shows confidence in the market, since the assumption is that the price should stay above the long term average, at least until the end of the current new cycle.
Swing trading is fun, but should only be done with a small portion of the long term portfolio. The goal would be to add on a sizable dip. But the dip might not occur until prices reach the higher resistance levels, noted on these charts. The bullish targets (green) are based on previously broken long term trends (light blue) and important horizontal levels from the previous bull market. In the event that these targets are reached sooner rather than later, I'll reassess the market based on how all the indicators are looking.
This is not financial advice! This is meant for education, speculation, and entertainment only. Enjoy!
-Victor Cobra
Note
Not really quite a break of the parabolic move yet. The 9w EMA (orange) still holds. The 50 hasn't even crossed above the 200 yet. I can see a channel like this playing out, which would be in line with my outline for a pullback here. On the other hand, it can also decide to break out of the uptrend channel to the UPSIDE.
If you want to see an uptrend channel breakout, look at the NEO/BTC chart:
This sort of price action doesn't usually happen unless we're in a bull market.
Note
In terms of moving averages, this still looks like any of the the other pullbacks from earlier on in this bull run (beginning March 12th). The main point of this post is to show that a correction usually happens towards the 100d MA (green) at some point, and that's usually the best place to buy. We'll see if it happens now, but so far, this dip is being bought, and some coins are continuing to look quite strong (NEO and NANO, in my portfolio). Note
Ultimately, I did expect some major resistance near the $140-142B level, but the index made a slightly higher high from last year, and a very strong recent weekly close. It deserves some consolidation here, and even a larger pullback wouldn't be unwarranted.Note
Here we go, this is the pullback I was waiting for. Very close to the 100d MA. A sustained break below could indicate a longer period of bottoming for the cryptocurrency market, as this would be a departure from past behavior. Note
How about that, folks? Still holding the 100 day MA. 
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.