Monday, February 12, 2018

Bitcoin Market Update – Breakout with Historic Buy Signals!


Nate Update: 

I have returned from two weeks of very fun off-road motorcycle riding in Southern Utah.  That’s the good news. 

The bad news is that I had a 30+ mph encounter with a boulder and the boulder won – launching me into a head/back landing that resulted in 3 fractured ribs and 3 compression fractures in my vertebrae! 

Painful for sure, but thankfully I will heal - hopefully with little or no lasting damage.  Soft tissues are already better, but bones take longer to heal. In the meantime, my energy level is returning already, but not quite what it was, so expect a slow ramp back up into things.

Bitcoin Breakout:

Bitcoin (also as a proxy for the rest of the Crypto market) is breaking out from a descending wedge pattern as seen clearly on the Daily chart below:


A descending wedge is a coil, the breakout higher should be strong – I would like to see buying pick up over the next several days to confirm the breakout.  Note that two days ago price broke the downtrend line, but that line was retested and now prices have bullishly reversed yesterday’s downside move.

There are two historic buy signals on this chart!

First note that the volume on the day prices bottomed at $6,000 was heavier than the surrounding volume – that is a positive. 

More importantly, since 2015 there have only been two prior instances of BTC price actually touching or going below the 200 day moving average (dma).  You can see that prices fell below that average for a few days.  The 200 dma is a very important long term indicator for Bitcoin because it’s hard to tell how far ahead of itself prices are at any point in time.  But at the $20,000 peak price, BTC was almost 4X the 200 dma!  That was a historic over valuation at that level.

EVERY TIME (as in 100% of the time) that prices have been below the 200 dma, it has been a perfect entry point to buy Bitcoin!  Thus, NOW (or any level below or close to the 200 dma) is the right time to be buying via that indicator alone.

Now note on that chart the MACD.  Those low MACD figures represent a historic BTC low.  And if you look at the red circle you will see that from those historic low levels the ‘fast’ has crossed over the ‘slow’ thus indicating a BUY SIGNAL on the Daily MACD.  Note that the weekly MACD is still on a sell, but that the monthly MACD never went to a sell, and is still on buy signal.

The chart below is a WEEKLY BTC chart.  It shows a strong bottom-like Doji candlestick, often seen at bottoms.  The price moving out of the wedge and up from the cross is bullish:



Now please take a good look at the following chart.  I have replaced the MACD indicator at the bottom with RSI (Relative Strength Indicator).  There have been seven instances since the beginning of 2015 where the RSI has touched or dipped below the 30 level.  Just look at the last two times!  Had you bought on each low, the return from July of last year to the next high was 178%, but the return from the September low was a staggering 621%!


So, should you buy when the RSI dips below 30?  YOU BET!  That just happened, again, a good place to buy.  Note that the data for BTC doesn’t go back in time far enough to have useful data on the weekly and monthly chart for RSI.

All these indicators tell me that this chart is bullish, that it is time to get money back to work in the BTC market, keeping in mind that the rest of the Crypto space follows Bitcoin.  I expect to see the overall BTC Market Cap skyrocket from here:

Market Cap Total

Note that total Crypto market cap was cut in half, bottoming just below $400B.  Today it is at $426B, I expect that we will cross the Trillion Market Cap line prior to the end of July.

Best,

Nate

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