Getting tired of Bitcoin's consolidation?
There's definitely more to come for the next day(s) at least [not going to play fortune teller on this; that's for the idiots that pretend like they know how the markets work.]
Let's take a look at Bitcoin currently (with the reversion ribbon v2 already applied to it)
Librehash Reversion Ribbon V2 (Daily Resolution)
In the chart above, we can observe a few things, namely:
- The ribbon is still well above the Histogram in terms of height. Even though its overlaid on the chart, this can still be ascertained by law looking at the raw data associated with the indicator's values (which TradingView provides).
- When the ribbon is above the Histogram, that signals a crossover into the bullish trend territory. The opposite is true when its below the Histogram.
- The ribbon is currently headed downward, which indicates the market direction (literally); so down means the market is going down.
- The ribbon is spreading further apart, which means that there is increasing divergence in the move. Since the move is downward, this indicates that the market is moving down at an accelerated pace (in comparison to what its done previously)
- The ribbon itself is dark red, so we know that the bearish momentum is clearly present in the price of Bitcoin at the time of writing.
The candles are 'purple'-ish (maybe you interpret this differently; we're going with purple in this case though). That's not the blood red that we see them turn whenever there is extreme sell pressure. What we're seeing indicates bearish ambivalence.
The main thing that we want to watch for is convergence.
Below we can see the downward trajectory of the Histogram:
Let's move forward and take a look at the actual candles on the chart to see what we can glean from their orientation (you'll see what that means in the next section)
Bull Pennant Clearly Forming on the Daily Resolution
Wash, rinse & repeat with what we saw with Theta (covered a bit earlier than this price analysis).
As we stated there, this is a bullish continuation pattern.
Typically the pattern looks like the following:
Which means that its usually marked by:
- A lengthy run-up
- Followed by a cooldown period of consolidation (price moving sideways)
- Eventually the price breaks out of this consolidation phase (typically around the apex, but not always)
- This breakout should be accompanied with volume (this is a critical confirmation sign; ignoring it will be to your own detriment)
Thus, this is the expected price action at some point (not saying that this is coming in the near future / tomorrow / making predictions about when ; don't ask):
Librehash Relative Strength Index(14)
We're staying on the daily resolution for this one.
Check it out below:
Even though it looks bad, it really isn't.
This is a nice cooldown period for the bulls (and this also takes Bitcoin out of that dangerous blow-off top territory that it was hovering in for a little while).
Again, as noted in the Theta price analysis a decreasing RSI just means weakening trend (if the trend is headed in a bullish direction). In my opinion, the RSI was created to monitor the bullish case, since it can't do the same when in a bear market.
[Quick Note: There was about a 5-hour gap a this point in the price analysis where the author had to leave to handle some other things (like sleep); so the next few charts may not be exactly congruent with the price that you saw previously - but based on the ensuing price action, nothing about this forecast up to this point warrants changing]
One More Parting Thought on the Bull Pennant Consolidation
One of the trademark confirmations of this consolidation pattern is decreasing volume throughout the continuation phase (which is something that we see below):
As today is Sunday (January 17th, 2021 at the time of publication), part of this is due to the lowered trading volume that we see on the weekends (which should tell us that there's substantial institutional investment because they're all trading the futures markets with vigorous volume currently).
Librehash Double Guppy Channels
There's not too much to glean from this indicator, except that the price has moved from that upper bullish channel into the 'orange sea' that we have in the middle here (not at that lower bound though):
This is a really healthy place for Bitcoin to be in, to be honest. Everyone should like what they're seeing here.
You don't want to see a bunch of volatility and violent dump offs (i.e., like the last blow off top where the price traveled from $20k down to sub-$14k, then back up to $17k in just two moves).
Rather, we're seeing a cool consolidation that's a reasonable distance from the ATH that was set a couple of weeks prior.
As we noted at the time, our indicator readings for Bitcoin were off the chart.
Bitcoin isn't quite an entry yet. Of course, we'd never consider a short in this phase of th market because we aren't morons, but let's allow Bitcoin to finish this consolidation phase.
As we see sparks beginning to fly again, we re-enter and lock in for the ride.