Bitcoin Still in its Endless Loop of Consolidation

27 במרץ 2019

Since there has been some more slight movement for Bitcoin, we’re going to go ahead and take a look at the charts and see if we can detect any interesting developments in the indicators or the patterns that would lead us to believe that something will happen that is not in accordance with our prior forecast.

Bitcoin Price Analysis



The chart above shows Bitcoin on the H4 resolution (Bitstamp).

The red translucent boxes in the chart above mark each time that Bitcoin has failed to cross that horizontal line (ridiculously strong resistance at this point).

From the picture above, its pretty obvious that the 4K mark has successfully thwarted Bitcoin each and every single time that it has tried to cross above. This is essentially the key battle zone between the bears and bulls.

There are two scenarios that will more than likely play out here:

A) Bulls win and there is a major price increase

B) Bears win and there is a major price decrease

Some people may be reading the above statements thinking, ‘Well duh, the price will go up or down’. But one should take note of the modifier “major”. When the market does make a concrete decision about which way Bitcoin’s price is going to go, the price action will more than likely be tremendous because the decision will represent a failure on the part of bulls/bears.

Relative Strength Index(14) [H4 Resolution]

Simply put, the RSI(14) on the H4 resolution is looking bearish:



Why does it look bearish?

As shown in the chart posted above, we can see gradually decreasing highs along that trendline that was drawn over the last two tops for Bitcoin.

Assuming that the current RSI(14) value does not markedly exceed its previous localized high (74.31), then this should be considered fairly bearish.

Take This With a Grain of Salt Though

This is only the H4 resolution reading, which really only allows us to make accurate forecasts about price action in the immediate future.

So, to get a better gauge of what Bitcoin may do in the coming days and weeks, we’re going to move to the daily resolution.

RSI(14) [Daily Resolution]



The fact that the last high is lower than the one that preceded it is a valid reason to be ambivalent about the RSI(14) reading here.

However, it is worth noting that we can see a series of progressively increasing lows on the RSI(14).



Zerononcense Reversion Ribbon V1

This is actually a different version of the ZN Reversion Ribbon that subscribers have. This is being used for the sake of simplicity.



Without digging too deep into the minutiae of what this indicator means and how to glean varying conclusions from this, we’ll lay it all out below:

1. There is a lot of room for growth here in terms of the indicators values.

2. On December 17th, 2018 (localized ‘bottom’; 3.2k), this indicator displayed the lowest value that it has ever displayed before.

3. Since then, the ribbon’s height has increased substantially. It provided a weak ‘buy signal’ late February (this indicator is a lagging indicator because of the infusion of MAs into its code).

4. This indicator is rather ambivalent at this point. Consolidation is always the great equalizer of lagging indicators.

CM Super Guppy



This indicator is very rarely used by Zerononcense in a price analysis, but the indicator’s reading is of note.

In the picture above, we can see the ‘gray lines’ emanating from the indicator. That’s a signal of a potential reversal (but far from a ‘guarantee’; this isn’t a crystal ball).

This indicator is also built from MAs, so these results were manifested from lagging indicators (trending results based on existing and prior price information).

However, that does not invalidate this reading.

Zerononcense Double Guppy Channels



There isn’t too much to extrapolate from this indicator on the daily resolution because of the heavy consolidation in Bitcoin’s price action. The width of the channel is determined by prior price action (again, constructed from MA indicators), with an upper and lower bound limit set by the lookback period’s ‘high’ and ‘low’.

Ascending Triangle (Flat-Top) Pattern Still in Play

We have been talking about this pattern formation for quite some time, and it is still valid and in play to this very second in time:



Generally, this is a bullish chart pattern.

However, we can not forget that it could be some time before Bitcoin finally busts out of the apex of this triangle:



Technically, we have 118 days before the price would officially begin to fall out of the apex. But again, the price does not need to reach the apex before a valid breakout occurs.

We just need to make sure that said breakout has an accompanying spike in volume when it does happen.

Underlying Support

Even more important, we cannot forget the underlying support for Bitcoin here either:



For all intents and purposes, Bitcoin could return to this underlying support point. If that did happen, it would represent some appreciable losses.

There are some intermediate supports though that must be considered before the price reaches that point:



Conclusion

It is significantly more likely that the price will return to 3.8k rather than fall straight through to 3.5k, but this cannot be ruled out.

Without a catalyst of some sort or just a straight up breakout, traders may be in for more consolidation (yes, its been consolidating forever). However, at some point, something has to give.

For now, there is no R/R on this trade. We are just monitoring the price action at this point and remaining cognizant of all potential possibilities.

Overall, in the long-term, we are extremely bullish on Bitcoin’s price action moving forward.