In the Bitcoin diagram we can distinguish two characteristic signs, from those that are usually chased by technical analysts. The first is the formation "shoulder, head, shoulder" (marked with red arrows). In other words, we have two lower peaks and one higher among them. The theory is that if the white line (neck line) is broken down, then the price will probably go down. This is the negative scenario.
Our positive scenario comes from the mobile average (KMO) of 200 days (blue line). KMOs are used to normalize price fluctuations and give a clearer picture of the trend. Throughout the ten-year history of Bitcoin, when it remained above that CMO for over a month, the era of bulls lasted a long time.
The popularity of KMOs is due to two main elements. In their simplicity and objectivity. Mathematically, a point of the KMO is defined as the sum of the values of a certain number of observations, by the specific number of observations. For example, a point on the 200-day curve is calculated from the sum of the closing prices of the previous 200 days by 200 (ie the number of days). The next day, we will do the same calculation, only the first day will be replaced by the last, most recent one. Each time we take out the older day and add the newer *.
Why use the mobile means of 200 days and not some other number? Because this is the most popular international sign that distinguishes upward and downward trend. The period of the "bulls" in relation to the "bears" is not a formal separation. This is the time period characterized by the confidence of investors who are possessed by strong expectations that the rise will continue.
In the bull phase, the surprises are usually positive. That's why any correction is an opportunity to buy. On the contrary, if it is in a downward trend, in order to win you have to be lucky and buy at the absolute bottom. It is a method that is not recommended, even for experienced traders. No matter how many times you are lucky, it is only a matter of time before your good fortune is saved.
The good and bad scenario based on the chart we see, could be said in any other stock market value. But with Bitcoin we have a peculiarity: high volatility.
The next big bet from early finding the trend is to tame variability. It is not domesticated by many trades, but by finding tassel movements.
The trend seeker is looking to find the search engine. Neither the absolute bottom nor the absolute top. The only ones who discover them systematically are the liars.
In crypto there are big trends, more easily detectable and exploitable than what you have invested so far, in stocks, derivatives, FOREX. Even retreats are possible. For example, in April 2018, while the bear period had begun well, from $ 6,500 and within a month it reached $ 10,000. It gave us a lot of space to perceive the movement and take advantage of the opportunity.
The realistic scenario
Let's look at the realistic scenario, tailored to the specifics of Bitcoin. As shown in the diagram, with a red box we have noted not 1 or 2, but 6 cases where there has been a decline from 30% to 40%. And when please? In 2017, the year in which Bitcoin's epic upward movement occurred from $ 1,000 to $ 20,000.
For better or worse, this is how Bitcoin behaves, and it is more likely that it will continue to do so in the near future, giving opportunities and hiding risks. Certainly historical data shows us the past. They do not predict the future. However, in the past we have been told a lot about the behavior of stock market values. If you hope it doesn't happen again, chances are you're wrong. You better be prepared if you want to get involved.
If we have a 30-40% decline again, where will it stop? Nearly $ 6,000.
So even in the bad, but completely realistic scenario of significant correction, Bitcoin remains on an upward trajectory. It will be an opportunity to place the last hesitants, before he starts his journey to the moon for good, as they typically say in the field of crypto.
Be that as it may, whether Bitcoin is on its way to the moon or is lost in the depths of the ocean is predicted to be exciting.
