The prior bitcoin chart talked about the weekly chart setting up for a multi-week rally. Bitcoin is ready to rally higher for a few weeks. The oversold RSI and stochastics are agreeable to a recovery rally on the weekly basis. Ditto the falling green wedge that is a bullish pattern.
The green lines show all the chart indicators positively diverged as price prints the lower low. She is all fueled-up and on the launch pad ready for a move higher on the weekly basis. The pop higher occurs at Thanksgiving but bitcoin struggles due to the lingering negative news around the phony FTX dude Sam the Sham Bankman-that's-Fried, the guy with the fifth-grader voice that is dressed by his Mom each day as if he is going on a play date.
Thus, bitcoin lingers sideways but note that it does not make a lower low on the weekly basis; a lot of, or all of, the bad news is likely priced in. The possie d shows that there is no reason for price to come back down technically; instead it is ready to rock and roll higher. Last week, the fuse was lit and bitcoin jumps +15%. There should be plenty more upside as the muti-week rally kicks off higher.
The purple arrows show the tight standard deviation band squeezes. Tight bands squeeze-out big price moves but they do not predict direction. For that squeeze at Halloween, the move was a flush lower, but as explained with the possie d green lines, there was no will to take price much lower. Typically, the bands will resolve by widening quickly and price continues in the direction it has chosen but not this time. Due to the news on bitcoin and continued fallout from FTX and Fried-brain-man and other cross currents, price tags the lower band and muddles sideways instead of collapsing.
Thus, there is a round two tight band squeeze coming. Same dealio. Direction is not known but a big hint is received with the +15% orgy last week. Considering that price is long overdue for a relief rally, and the weekly chart is possie d, the expectation is for a strong move higher over the next month. The middle band at 18492 was in play and it was already tagged. A move to the upper band at 21.7K is highly likely and may occur anytime over the next couple weeks.
The 50-wk MA is coming down to form a confluence at the 200-wk MA at 24500-ish. This is also where that big gap is at so it is a triple confluence that may serve as a magnet for price pulling it higher first to 21.7K then on to 24K-25K at the gap. Bitcoin is on an island right now that was formed when it fell through the gap last June. Thus, an island reversal pattern has potential.
When bitcoin rallies higher, watch that 24-25K level that is the edge of the island shown as the light blue oval. Price may head higher to 24K-25K and then continue higher in an orderly fashion to 26K and 28K and then 30K to fill that juicy gap, or, bitcoin may create an island reversal where price comes up to the 24K-25K level then bingo, in a heartbeat, price pops back up through the gap from 25K to 30K. Hence, this would be called an island reversal pattern (price jumps the same gap again this time to the upside). The other scenario is simply a gap-fill. You can watch the charts to see what is going to happen.
But those will be things to think about in a few weeks. Back to the here and now, the pink box for the ADX verifies how bitcoin was in a strong trend higher during late 2020 and early 2021 but it petered out in springtime and early summer of 2021. Bitcoin has sh*t the bed for over one year, falling, falling, falling, and yet the ADX is only at 26. Despite the long painful downtrend for bitcoin, the ADX does not consider the over one year move lower to be a strong trend lower. Isn't that something? The ADX needs to get into the high 20's and 30's and higher to verify that the price move is in a strong trend, be it up or down. This lack of a strong trend lower after over one year of the price falling, is another feather in the bull's cap going forward.
The Aroon shows the red bear line overbot and the green bull line oversold. This tells you that all the bears are boasting that bitcoin will collapse and is a piece of trash and they are almost 100% confident it will continue falling in price. The bitcoin bulls are in the same boat almost 0% confident that price can ever rally again or in other words, the bulls are also convinced that bitcoin has lots more pain ahead. You know what happens when everybody and his bro is on one side of the boat expecting bitcoin to collapse going forward, right? It is a contrarian indicator and the Aroon indicates that a rally is likely ahead and a bullish cross somewhere out there in the right margin.
The red lines are shown to recap Keystone's top call in bitcoin during the Fall 2021. It was easy. The red lines clearly show neggie d so anyone that stayed long was a complete idiot since a kid in fifth grade could have told you to sell, Mortimer, sell! Price was also above the moving average ribbon desperately needing a mean reversion lower and the stochastics and RSI were overbot agreeable to a pullback. It's simple. Traders can do fundamental analysis on bitcoin until the cows come home, but if they are not looking at charts, they are losing money.
So down she goes for over a year and the green lines now show the positive divergence set-up to make the bulls happy. Bitcoin will rally for a few weeks forward. Let's see. Bring up the daily chart. You can see the possie d bounce on the daily chart as well and bitcoin price has legs higher in the daily time frame; stoch's are overbot, however. Bitcoin looks bueno for a multi-week rally. The bitcoin monthly chart has a weak and bleak MACD line so after the multi-week joy occurs for price, she will roll over again and probably come down to check the important 13K-14K-ish support.
Thus, stirring all the mumbo-jumbo together and sprinkling on some voodoo dust, bitcoin looks good to rally for a few days say during the week ahead. Then a pullback on the daily basis say the following week. This slight pullback will be no big deal because the multi-week rally will be kicking into gear and bitcoin should rally from now well into and perhaps through February. An upside target of 21.7K then 24K-25K may be on tap by the time February ends. But then price will probably roll over to place a lower low at 13K-14K in March/April so the ride may be crazy town.
Price may rally for a few weeks and top out at the 21.7K then retreat. You will have to follow the charts to see what is happening. Price may go crazy and run to 30K or more printing the island reversal pattern described before coming back down. In general, the bitcoin trade is long for next few weeks.
Keystone is not in bitcoin and does not play it directly. Keystone is old school and trusting your money only to 1's and 0's and a gateway of passwords was never an appealing investment. However, Keystone is holding some RIOT on the long side. The trade is back to flat after last week's euphoria. RIOT popped 41% last week a tasty treat and is set up the same as bitcoin so it should run higher for a few weeks.
GBTC popped +31% last week. Bitcoin and other digital currencies enjoyed an upside orgy of joy last week. GBTC is set up the same as bitcoin and RIOT for a multi-week rally. The only thing that can stop the bitcoin positivity for the next few weeks would be another FTX bankruptcy and goofball CEO making excuses in a fifth grader's voice. 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 Monday Morning, 1/16/23, at 8:36 AM EST: Bitcoin rockets to 21,428 then retreats to 20.8K. Looks like 21.7K will occur in quick order which makes the test of the gap resistance at 24K-25K more likely going forward.
Note Added Tuesday Morning, 1/17/23, at 10:20 AM EST: Bitcoin pops to 21.6K now at 21.3K.
Note Added Wednesday Morning, 1/18/23: USD 101.83 lowest in 8 months. Euro 1.0816. Dollar/yen 128.55. Bitcoin 20.6K.
Note Added Saturday Morning, 1/21/23: Bitcoin 23,030.
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