When reading charts, a change in the behaviour of any Cryptocurrency trading pair is always a strong signal, a signal that predicts change.
If Bitcoin, in this case we are looking at the XBT index, is behaving in certain way for a long period of time and this behaviour suddenly changes, that’s all we need to know.
The behaviour changed which means that things are about to change.
We are now looking in retrospect which is always easy, but since we have friends that are still bearish, we would like to call this signal to their attention in the hopes that they too can adapt and change.
At the same time we can learn some technical analysis and how to approach different charts.
While the intention was to point out just one single/simple fact, many new ones appear as soon as I open a chart and thus allow me to entertain you for a few minutes more:
- Right after the November 2021 top, Bitcoin produced mainly two upwards correction.
- 1) From January ’22 to March ’22.
- 2) From June ’22 to August ’22.
- Each correction lasted exactly 63 days, 9 bars/candles, and lead to a lower low.
When the bear-trend was taking place, you would always end up with a lower low.
Another peculiar detail is that Bitcoin never produced more than 2 green weeks in the two upward corrections, price bounce, mentioned above. Maximum two weeks green always followed by red, confirming that the bears were strong.
In November 2022 a new lower low comes in and the pattern chances completely, Bitcoin starts going sideways.
After a period of sideways action, clearly an accumulation phase, Bitcoin breaks with massive force/strength to the upside and by day 63 closed green 4 weeks.
After 2 red weeks we have another green week that leads to a higher high compared to the peak produced in the bullish breakout the month before. This higher high also produced the highest price in more than 8 months (February 2023).
Notice how Bitcoin’s behaviour changed.
When in a downtrend Bitcoin was behaving in a certain way. As soon as this downtrend was over Bitcoin’s behaviour changed which leads to the next chart:
- After 378 days going straight down and printing lower lows, Bitcoin changed direction and started to go up.
- This is confirmed with the major downtrend line being broken.
Using a linear chart we can spot the break of the downtrend sooner than with the logarithmic chart:
- This is what Technical Analysis (TA) is good for.
- As soon as Bitcoin broke above the blue space, the range encompassing the June 2022 and November 2022 lows, we can say the doors are open for growth.
As long as Bitcoin trades above the $15,486 to $17,596 price range the potential is there for prices to grow and produce higher highs and higher lows.
This is not a prediction, this is what the chart is currently saying.
If Bitcoin moves below this price range things can definitely change and the bears comeback ahead. But the fact that we had 4 green weeks, an 8-months high, a change of behaviour after more than a year of lower lows, as the downtrend has been broken, we can easily say that the bulls are now in control.
The bearish potential has already been nullified with last months price action.
The bears would need to break the above mentioned price range, 15.4-17.9k, for new lows to be considered as the chart is looking today.
Since Bitcoin is trading above its November and June 2022 lows, we can expect to see next a higher high, because a higher high follows a higher low.
Namaste.
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