Today I want to bring forward an important Buy Zone I came across. It is a combination of Bitcoin's key cyclical trend lines and the MACD on the 1W chart.
** Before we start please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
At this point I need to mention that this study was inspired by this made by the community's esteemed member VovaNapas.
** The Cyclical Trend-lines ** As you see on the chart there are two key trend-lines on each of BTC's three Cycles:
- The one in red displays the Resistance trend-line of Lower Highs that start from the peak (All Time High) of each Cycle and ends once Bitcoin breaks above it with a sustainable series (candle closings) of candles. This trend-line contains the Bear Cycle in it as well as part (or most) of the Accumulation Phase. - The one in green displays the the Support trend-line of Higher Lows that start from the time the price breaks above the Lower High (red) trend-line and ends until the Cycle's peak (All Time High). This trend-line contains the Bull Cycle as well most of the Bear Cycle.
** The Cycle's Best Buy Zone ** So if the green line contains most of Bitcoin's sequence which part of the trend it doesn't contain? Well this is the essence of the current study and in my opinion this is the most important part. As you see on the chart the area outside of green lines is the one with the blue Ellipse. This Ellipse is the region below both the red and green lines and represents the Best Buy Zone of every Cycle. Why? As you see it is the area starting after the green line breaks and before the price crosses above the red line and (practically) start the new Bull Cycle.
In other words we can say that it is the area after the worst of the Bear Cycle is over (and the Bottom is made) and the area before the new Bull Cycle starts. What more can a long term BTCUSD investor want? The trade with the lowest risk (price completing the decline with a Bottom already in place) and highest return (before the new Bull Cycle starts). This is why I call this Ellipse as "the Cyclical Best Buy Zone".
** The LMACD Pivot Zone ** On top of that, our very accurate LMACD indicator offers a unique Buy Signal when being traded on the current levels after the Bottom is in. As you see on the chart, after every Cycle bottom the LMACD rises and (in the first two Cycles) pulls back quickly for a retest of the -0.10/-0.05 region. This is when the price makes a Low (Higher Low on the Bottom) and then a Parabolic Rise to the new All Time High starts. I call this region "the LMACD Pivot Zone".
Now we can argue that this time (meaning on the current Cycle), the LMACD rose initially very aggressively without pulling back to that Zone. Well it is no surprise that the market made that violent correction since the June 2019 High, and is right now testing the LMACD Pivot Zone for the first time since it broke it in April 2019. Why it took is so long to re-test it? Could be due to Bitcoin's Lengthening Cycles Theory which I have analyzed in the distant past (and I think it is time to do again on my next ideas).
Regardless of that, I believe it is no coincidence that the re-test of the LMACD's Pivot Zone is taking place now that the price broke below the green trend-line and has essentially entered the Buy Zone of the current Cycle.
** The Fibonacci extension application on the Cycles ** An interesting characteristic of Bitcoin's Cycles when those trend-lines (red and green) are applied is that every break-out from the red line roughly has the same distance from the previous peak (All Time High). To put that into perspective, as you see on the chart the start of each bull run is at 0 Fibonacci level, the peak of the Cycle is at 1 and the time the red trend-line breaks is roughly the same distance (with some variations). The 1st Cycle ended on the 1.9 Fibonacci extension, the 2nd ended on the 2.1 (+0.2 from the previous) so it is natural to assume that the 3rd will end on the 2.3 (+0.2 from the previous) which times it on October 2020!
** Aiming $200000 on the next peak ** Where can this Buy Zone lead to? According to the decreasing rate of -50% on the difference from every Higher High rise (1st Cycle = +3450%, 2nd Cycle = +1700%) then the 3rd Cycle should peak at -50% of the 2nd i.e. 1700% / 2 = +850%. Which numerically makes a peak at $200000.
On the charts below you can get an initial idea of the Lengthening Cycles Theory and see how Bitcoin is still within the trend-lines of the Parabolic Growth Channel which I drew over 1 year ago (January 2019)!
It is more than obvious that the long term bullish (parabolic) trend of Bitcoin is intact and traders simply got over-excited last year from the April - June excessive rise which was outside the long term models and was purely due to very bullish news (quicker adoption, Libra etc etc). The long term investor can still seek to accumulate more as we comfortably get ready for the Halving event and the official start of the new Bull Cycle this year.
Do you agree that the current price range represents the "Best Buy Zone" of the current Cycle? Maybe you have an alternative buy spot or simply a completely different argument? Feel free to share your work and let me know in the comments section!
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Have you taken into account that the stock market is in a dead cat bounce and the stocks are going to tank? I believe BTC will follow the stocks down. You can't do TA on crypto without considering the sp500 is going to crash. We are headed into an economic crash with GDP < -20% for a year or two and all of the bubbles: housing, automotive, debt, banks, airlines, tourism (not just cruise ships), mom & pop stores, farmers, etc. are going to crater financially and a large portion of the companies are never coming back. I think a 1k BTC is quite possible this year when the economic reports start coming in and people realize our economy won't recover for years and will never be as strong as it was before.
Our just-in-time supply chain model is broken and cannot be relied on unless manufacturing restarts in country. Depending on China to manufacture our goods won't work any more. No one is going to buy goods from a country that is responsible for releasing this devastating weapon and killing our friends and family. Globalism is the key point of failure and will have to be reworked which will take years. The virus won't burn itself out and we won't get herd immunity because people who recover from it, have gotten it again and it is more lethal the 2nd time around. Those that recover have lung and heart damage. The virus will be here forever. It was engineered that way. Vaccines at best are only 75% effective. I am saying all this because it will take years to get the economy working again. There is no quick fix for this problem. With all of the money being printed we will get hyperinflation in a couple of years and BTC will finally take off. But before that happens, I see a much lower BTC, near 1k as our economy crashes and burns.
I'm sorry to be so bleak, but the worst is yet to come. I hope to be proven wrong, but by Oct we should know how bad it will be.
Railion
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@BDG, I agree, it's very tough to make a decision though. I really think 1K could be happening but where do I sell..
BDG
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@Railion, I'm not selling. The point I was trying to make is, we may see really good discount in BTC later this year if the stock market crashes. I would not buy more at 7k but I will be ready with cash to buy should the price fall below 3.5k and for every every $500 that it continues to fall. The time to buy is when there is blood in the street and we are not there yet.
AlexanderGabrielLuyando
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@BDG, i bought at 7300 last week, going from a holdings of 0 to $2000, and as an inexperienced trader I bought in for a handful of reasons: The Fed lowered interests rates rapidly as fuck, MORE cheap credit, I don't have assets of my own, and I am losing faith in the US dollar, so I looked to buy my own asset with value, and that was Bitcoin. A lot of talks of giving out USD, I lost my job and was lucky enough to get pandemic relief, and I can't really spend it, and at the same time I am holding on to these USD with the thoughts that our society could possibly crumble if we cannot go outside for too much longer. Bitcoin is MINE, and I don't believe that it will be worthless for a long time, if ever. RIpple is also propped up by the banks. I think it is safer than the dollar in the long term.
tgunit
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@BDG, I have been a permabear on stocks but the TA is pretty clear that we are entering a hyper inflationary depression Weimar style. That means the worse things go, the higher stocks go. This can go on for a very very long time. BTC 1 million is not about winning the lottery, it is a story about how bad the USD will be.
BDG
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@tgunit, long term I agree. Let's not forget hyperinflation takes at least 2 years of very high inflation before it goes into hyperinflation. Venezuela had high inflation of 50% per year for several years before it went hyper. Hyperinflation is > 50% PER MONTH.
But with the virus closing down businesses is not good for the stock market. Around 50% of the businesses that closed will never reopen. Bankruptcies will be at an all time high. This means bank loans will fail. Banks because they are highly leveraged will become insolvent and will require a much higher bailout this time around, in the tens of trillions of dollars. I strongly believe we will see a 50% or 60% correction in the stock market this year because revenues are drying up with so many people out of work. This is happening worldwide and the USD will be the last fiat currency standing. Yes we will get hyperinflation but this is 2 years away. But this year I expect a stock market crash and a BTC crash along with it. Remember the price of gold tanked in 2008 too, but it recovered first. Same with Bitcoin this time around.
tgunit
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@BDG, You don't actually need hyperinflation for these assets to moon. You need the threat of hyperinflation. I am a permabear too, but the charts are saying something else now that we are at the high in the spx. a nice 20% correction and then another moon phase. This can go on for years.
Gold tanked because the market appeared to stabilize and give better returns in every other sector. The market went on a decade long bull run and all the permabears took a decade to recover capital. You are talking about a deflationary crisis with a shortage of dollars again.
Things are rising because they are horrible-- they are crashing inversely. We are losing purchasing power in the dollar, so the market is actually still crashing, just upwards. This is a very strange environment for Americans because our mind is trained to reject this. In 3rd world countries this happens all the time. You have to get rid of your money because it is trash. Doesn't matter if it is a bubble or not.
Get used to a world of 30% crashes every 2 years and be ready to buy the dip when they print.
alienteck
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Great chart but the time frames also makes it that the price can half here and still be fine on the charts. So the best place to buy is the question since buying low is imperative for limited funds.
ArShevelev
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Best to plan your strategy step by step, not only blind buy all in and lose everything on next drop.
Averaging entries since 4k, whole move up buying damn dips. We still bullish here...
Our just-in-time supply chain model is broken and cannot be relied on unless manufacturing restarts in country. Depending on China to manufacture our goods won't work any more. No one is going to buy goods from a country that is responsible for releasing this devastating weapon and killing our friends and family. Globalism is the key point of failure and will have to be reworked which will take years. The virus won't burn itself out and we won't get herd immunity because people who recover from it, have gotten it again and it is more lethal the 2nd time around. Those that recover have lung and heart damage. The virus will be here forever. It was engineered that way. Vaccines at best are only 75% effective. I am saying all this because it will take years to get the economy working again. There is no quick fix for this problem. With all of the money being printed we will get hyperinflation in a couple of years and BTC will finally take off. But before that happens, I see a much lower BTC, near 1k as our economy crashes and burns.
I'm sorry to be so bleak, but the worst is yet to come. I hope to be proven wrong, but by Oct we should know how bad it will be.