Weekly Candles
For the whole 2021 (up until now) we have a total of 25 bullish candles and 17 bearish candles. After every strong move up we made so far, we had a correction/accumulation. The biggest correction of this year started on the second week of April after 530% bull run which lasted about 300 days.
Since then, we saw a drop of roughly 55% in the span of 90 days (19/04/21 – 19/07/21). This was followed by a bullish bounce in the next 7 consecutive weeks and gains of 54%-55% from the bottom.
After the mini run, we saw another correction wave with approximate 24% drop in the next 3 weeks. This brings us to the current point in time where we are reversing again from bearish to bullish with a strong bullish candle and 3 months left of the year. Where do we go next?
We cannot really tell 100% for sure which direction the market will go and we always have to remember that we are working with probabilities.
So far what history tells us is this:
We are in a bullish market: For the last year - 25 bullish and 17 bearish candles. Past bullish cycles in bitcoin last about 2 years, so we could just be 1 year in.
Every time we reverse the trend, we have a period of the opposite trend. It doesn't just snap back and forth like an insane person. Usually weekly trends last at least 3 weeks with an average of 2-4 months before exhaustion and small trend reversal. Last time we flipped direction the trend lasted around 7 weeks and the gains were 55% if you bought the bottom and sold the top. Even in a bearish scenario where the markets go down, we should see at least half of that and have at least 30% gains from the bottom before we see another correction in the opposite direction.
This looks like it could be a starting Elliott wave structure - 1,2 and now going for wave 3 up. This will perfectly align with the narrative that will see a major explosion in the crypto markets by the end of the year and that we haven't seen anything just yet. This reminds me of this one podcast I was listening to by "Rich dad, poor dad" . I am not 100% this was the right episode I listened to, but I wanted to give them some credit and share their channel. It's good stuff. Anyways, the guy who was being interviewed said that the biggest adoption of technology in humanity was the internet with a user base increase of around 65% annually. For the internet it took about 20 years to take over the whole world. Blockchain technology has an adoption rate of about 130% which if continues without declining will bring about 2 billion total users by the end of 2024.(according to this one dude who was invited to this show. Lol. Wish I could find it. If I do I will post it in the comments later) ULTRA BULISH.
Now, 1 and 2 is what we can see happening in the past, and point 3 is more of a predictive future. The thing with Elliott wave’s is that it's quite hard to count them before they really happen. There is a variety of them and to me personally was never a super accurate tool for trading. It may or may not happen. You counting waves, but they go to 7 instead of 5. You know what I mean.
From the other indicators I can see that RSI is at 60.01 ticking upwards. That’s a bullish sign, we are not close to overbought at all and even when we get pass that range, we stay in it for a while. BULLISH!!!
MACD is ticking upwards again, but let’s not forget that this is lagging indicator and not 100% accurate and it’s best used in a combination with other indicators. I will give it a small “bullish” ... Just so we keep caution.
One more thing that can be considered bullish is the fact that price action is right above the Ichimoku cloud and using it as a support. If we are above it, the price will keep rising. If we enter it, we might go sideways, before the market decides which way it wants to go.
Now few things which will make us a bit more careful and we should not forget are:
We are hitting the 1.618 upper band on BB and this has acted as a solid resistance in the past. We hardly ever stayed above it and it works like a magnet for the price. We haven’t been able to break above it since early April.
We are also hitting another hidden resistance we have not pierced march. If we push above it in the next week and stay there. Price will go on a major run.
Overall conclusion as of the moment is that we are bullish on weekly. If I have to guess I would give it 70/30 for in favor of a bullish movement.
3 DAY
We are bullish on the 3 day chart as well. I won't go into as much detail as the weekly above, but 3 day chart is following the weekly trend.
Current stats:
RSI is at 59.81. Staying above 55 is a bullish indicator.
MACD is converging from red to green and MACD line is about to cross above the Signal line which is bullish as well.
We are still facing the same resistance lines we do on the weekly.
We are also poking up and out of the Ichimoku cloud. If we go above it... 100% bullish.
Zooming in on daily candles we can see that we are on a pivot point facing couple stacked resistances. We could easily just poke through the top of the triangle and then bounce right back down in it. Even so this is less than likely scenario. I have seen it play out before and won't rule it out as a possibility. Considering the fact that piercing through the resistance line will be seen as bullish sign by most of the traders. This could easily end up as a bull trap and a quick rug pull. The odds are not very likely, because weekly and 3 day candles are bullish. And if we follow the market moves we know that we still have some steam left in this move. There is also a possibility for the price to just touch resistance and go back down to retest the bottom of the triangle as well. I have also seen this play out before where the price will bounce up and down until it gets so tight between the resistance lines it has no choice but to break out one way or another. The other stats say:
RSI - 64.81 - Getting close to 70, but not there yet. So far bullish.
MACD - MACD line above the Signal line. Bullish. MACD in the green - bullish
Anyways... The daily candles are not making me super confident. Let's zoom in...
4 hour candles
We are snapping above the resistance line at the moment. As long as we go above it and show some strength in the move we will most likely see a retest to the top of the triangle before another explosive move up. The indicators look a bit exhausted at the moment and correction and downwards movement is also in the play.
RSI - Staying consistently in the 70's range since Oct 1st. At some point this needs to go down and take a breather. Most likely will happen in the next couple of days which will give us a 2 day trend reversal on the 4 hour chart. Maybe another drop to the top of the Ichimoku cloud before we try to break resistance again? I think a move to 46,500 is possible and in play.
MACD - It looks quite neutral. After few candles in the red, barely showing green and the MACD line and Signal line are intertwined like barb wire. Might go either way. It doesn't tell us much.
BB - Bollinger bands - We are in the high upper bands. Not sure for how long. If we do a similar move to the past day. We will break out of resistance upwards, glide on the top of the triangle before another explosive move up.
Anything beyond 4 hour changes too rapidly for me and by the time you read this article will most likely be old news. If you are trading or want to day trade on smaller frames, best thing to do is take the the big general trend and keep that in mind before you open a position. There is a saying "The trend is your friend!" for a reason. Patience is the name of the game. Overall trend is bullish. I am not making any positions at the moment and just watching how all this is going to play out in order to give me a better idea of what to expect and better odds. Let me know in the comments what you think. Share your ideas !!!
Disclaimer: Not a financial advise. These are my own thoughts and I am not a professional financial advisor. This is for entertainment purposes only and educational purposes only!!!