Crypto remains all the rage nowadays so a look at bitcoin is in order. That FTX loser Sam Bankrupt and Fried, or whatever his name is, will have to face the music but come on people, who gave their money to a guy with a fifth-grade voice that was dressed by his Mom? It is funny stuff. But SBF, his name turns into an acronym, too bad for all the good and noble SBF's out there, will have his day in court and the entire crypto world is more worried about a serious implosion on a wider scale. It is always darkest before the light.
Don't worry, be happy. The bitcoin weekly chart is shown above; it is a colorful abomination. For sh*ts and giggles, let's look back at Keystone's top call in late 2021 (red lines). It is not rocket science, nor brain surgery; it is only simple neggie d that made the call easy. Bitcoin made the higher price in November 2021 with the euphoria off the charts one analyst out-doing another proclaiming higher and higher forecasts for bitcoin (the opposite is occurring now going into 2023 with everybody and his brother predicting further doom and gloom for crypto).
The bitcoin bulls got punched in the face due to their hubris. The price high comes with all the chart indicators sloping lower; negative divergence. It is the kiss of death. The price is running higher but ALL the indicators are negatively diverging lower. It tells you that price printed that high on fumes. The fuel tank is completely empty so you know what happens next. Bloop. Down she goes.
The red stars show how price was extended above the moving average ribbon (price above the 20-wk MA above the 50 above the 100 above the 200) requiring a mean reversion lower another go-signal for bitcoin bears. Price also violated the upper standard deviation band (purple) so the middle band was in play, and the lower band, and price tags both in late 2021 and early 2022.
The double-top, or M-Top, begins the long path lower and now with Baby Face Sam hauled-in on crypto-fraud, the negativity is rampant. Bitcoin enthusiasts now become crypto naysayers having to admit to the family at Thanksgiving dinner that the dough they bragged about last year had all evaporated including part of their capital. Don't let it get you down. Losing money in stock trading teaches you to not be stupid.
So bitcoin drops lower and the hand-wringing and oh woe is me talk is in full swing. The obituaries are written for poor little bitcoin; we hardly knew ye. Bobby Bitcoin, bragging about big bags of bitcoin a bunch of months back is now wearing a barrel.
Price hesitates down at that 19250-ish level and it makes sense since that is strong price support and resistance (S/R) from the end of 2020 (orange circle).
The large green falling wedge is in play which is a bullish pattern, however, that pesky blue descending triangle shows up which is a bearish pattern. Bitcoin falls through the base of the descending triangle which would be expected for that pattern down to 16114. The base of the triangle is 19250 and top 22400 for a difference of 3150 so the failure at 19250 targets 16100. Voila, the descending pattern is satisfied. Close enough for government work.
The bullish picture brightens with the green falling wedge remaining in play and price violating the lower band. The middle band at 19197 is on the table and also the upper band at 23192. The bands squeezed in tight in October so a big price move was on the come but the direction is unknown. It resolves to the downside because of the descending triangle (see the long red candlestick failure).
Okay, so all that mumbo-jumbo said, the green lines show universal positive divergence across all indicators on the weekly basis. As bitcoin made the matching and lower price lows, the chart indicators are all sloping higher; possie d. Bitcoin is loaded-up with rocket-fuel, in the weekly time frame, on the launchpad and ready to fly to the moon.
The green arrow shows the bottom on the weekly basis and it is in the rearview mirror. Yes, bitcoin has already bottomed on the weekly basis a month ago. There is no reason for price to come back down to test the lows since the indicators are all fueled-up and yelling at price to fly, fly, fly!!
Bitcoin should tag and test the solid resistance at 19197-19250. The weekly chart has legs but you will have to reassess in a couple weeks how things look. Price may want to continue higher to the 200-wk MA at 24271. The 50-wk MA will be dropping into that range and the upper band should be around 23K so call a target at 19300 in a week or two and perhaps 22K-24K in a month.
The pink box for the ADX shows that the trend higher in 2021 was a strong trend higher but it petered out later that year. Despite the downfall in 2022, the ADX is at 27 not indicating that the downtrend is a strong trend. This is a plus for bitcoin bulls hinting that the move lower is finished on the weekly basis. If price wanted to keep dropping, the ADX should be at 30, and 35, and moving higher proving that down is a strong trend but it is not, at least not yet.
The Aroon lines show maximum pessimism for bitcoin. The Uber driver told Keystone today that he lost his shirt on crypto and will never buy bitcoin again and told all his friends to never touch it ever. It is funny that in the subway the shoeshine boy said the same thing (think contrarian signal).
The red bearish Aroon line is overbot signaling that the bears are convinced that bitcoin will continue to collapse. The green bullish Aroon line is oversold indicating that the bitcoin bulls have completely given-up and they think that crypto will continue to collapse. You know what happens when everyone is loaded on one side of the boat, right?
So bitcoin has already bottomed on the weekly basis and up is the direction forward. All aboard! On the bitcoin daily chart, same-o set-up very agreeable to a rally. Price may retreat for a day or so to 16.2K but that should only set-up a launch point.
The bitcoin monthly chart is interesting. As price drops, the RSI is flat, which is possie d, the histogram is possie d and ditto stochastics and ROC. Stoch's are oversold agreeable to a bounce on the monthly basis. The MACD line, however, is weak and bleak, and the RSI is not oversold. The bounce in bitcoin right now with a multi-week rally is fortified by the possie d indicators on the monthly chart.
But after bitcoin rallies for a few weeks well into and through January, and tags 20K potentially 23K-24K, it will then roll back over to the downside on the monthly basis due to the weak and bleak MACD line on the monthly chart. Thus, bitcoin has happy party time ahead rallying for a few weeks but in late January or February, she will top out again and then drop and print a lower low in price than the current lows (to satisfy the weak and bleak MACD on the monthly chart; remember you are playing multi-dimensional chess with the time frames).
Keystone does not dabble in bitcoin. Some of the other crypto instruments are traded now and then. Keystone trades RIOT but the latest trade that is in play now is a long RIOT trade that is drowning but like bitcoin, RIOT is ready to travel higher over the coming weeks, so its a hold for now.
All of you bitcoin enthusiasts have been raked through the coals this year, and probably have coal in your Christmas stockings, but you will be happy over the coming weeks as bitcoin rallies higher and higher. The only thing that can stop bitcoin from rallying is another Baby Face Sam FTX scandal. But remember, it is only a rally on the weekly basis and after that exhausts, the monthly chart wants to see another new lower low in price that will likely occur around February or March-ish. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Thursday Morning, 12/22/22, at 6:46 AM EST: Bitcoin 16841. Ethereum 1219. XRP 0.35. Litecoin 66.36. Bitcoin Cash 101.12.
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