BTC- the backdoor to the bear marketI know there is and will never be one magical trend line, fibonacci tool, or technical indicator that can predict with 100% accuracy when a bull run may start, when we've reached a bottom, and when a bear market may officially start, but bare with me here. These fib circles are drawn from the top of the 2018 bull run, to the top of the 2019 run. If you look at the outer band, the 4.618, you can clearly see the significance of this level. After the blowoff top of 2018, we bounced off of this exact level 3 times before entering a mind numbing consolidation phase from July until November of 2018, before we saw capitulation that led to a 50% drop the moment we lost support of this band.
Then, from January 2019, we had a 300% increase (mild for bitcoins standards) in which we blew straight through this same level, until we were halted at 1.618, which marked the end of the bull run of 2019. From there, we then saw another 50% drop right back down to, you guessed it, the 4.618 in November 2019. Keep it mind that, at this point, one could have actually drawn these circles on their chart, as both market cycle tops were confirmed. We then ranged between this 4.618 as support and the 4.136 as resistance until January 2020, where we broke above and started what we all thought was the start of the bull run, only to be halted in March 2020, not by fib circles, but by covid. However brief (one weekly candle wick) it was, that was another 50% drop immediately upon losing the support of the 4.618. We recovered rather rapidly as markets go, and got back on track. In October 2020, we had a strong reaction to claiming support on the 3.618, the purple band, that marked the beginning of the 2020 bull run. We saw absolutely zero price reaction to any level until we again reach the 4.618, where we saw a mild 13% pull back to the 4.136, where we ranged in 2018 before capitulating 50%. From here, as we all know, we had another 100% run up to these recent all time highs around 65k before running into a sell wall that retail investors simply could not break.
From this point, at 65k, we had a 50% correction in May 2021 (as well all know). What we may NOT all know, is that we have actually landed on none other than this infamous 4.618 fib circle band, and for the last 63 days, we have held support on this band. Now, think back to the previous times I described above, where we rode this same band as support until an eventual 50% capitulation. The significance of the white trend line I've drawn remains to be seen, but we did see a strong bounce off of it just a few days ago, getting us back on top of the 4.618, as we have been flirting with the idea of testing yet again the range between the 4.618 and the 4.136. I say flirting because we have really only had wicks down below the 4.618. There is about 15% between these two levels at the current state of the chart.
I think you guys know where im going with this. Again, there will never be a magical indicator that says WARNING BEAR MARKET, but if history serves as a roadmap of the future, then we can safely assume that losing the support of this level will indeed lead to yet another 50% capitulatory event. We are treading on extremely thin ice here guys, assuming losing this level of support would have similar affects in this present day.
I would love to hear some of you guys' thoughts about this, as I dont see many people using fib circles on here. Try messing around with conecting market cycle tops and bottoms, and see what things you find. You can actually connect several different areas and observe price action respecting all those levels. For example, if you measure swing high of the 4 sort of "mountain tops" we formed between February and May to the lows we have just formed recently, then you will see that each set of those bands are very well respected, in a series of waves, if you will.
godspeed traders
