Halvening event of 2012:
Hi friends hope you're well and welcome to the new update on Bitcoin. Today we will try to understand why the Bitcoin is dropping fast just before the halvening event. In order to understand this situation we need to move back to 2012 to watch the history of the Bitcoin halving. Then we can observe that when we had the Bitcoin halvening event in November 2012 then BTC started dropping down in August 2012 this drop was started from 18th August to 20th August 2012. And this was a steep waterfall crash after that the Bitcoin recovered but just before the halving the Bitcoin dropped down again in October 2012. After that we have witnessed a strong bullish rally of more than 10000% for next one and a half year.
Halvening event of 2016:
Then in halvening event of 2016 we can notice that before the halving BTC started dropping down in Jun 2016. This drop was started from 19th Jun to 23rd Jun 2012. And this was another steep waterfall crash like we had before the halving of 2012. After that the Bitcoin recovered but just before the halving the BTC dropped down again from 3rd July to 2nd Aug 2016. After that we have witnessed a strong bullish rally of more than 3000% for next one and a half year.
Halvening event of 2020:
Now in current halvening event of 2020 we can again notice that before the halving BTC started dropping down from Feb to March 2020. This drop was from 15th Feb to 13th Mar 2020. And this was another waterfall crash like we had before the halving of 2012 and 2016. After that the leading cryptocurrency recovered back. But just before the halving the BTC has started dropping down again same as like before in 2012 and 2016. After this drop we can expect a long term bullish rally.
This combination of these indicators has given final sell signals:
As in my previous posts I told you that I am looking at the movement of BTC using the combination of these indicators to observe the bullish and bearish trend .
1st: Vervorrt heikin-ashi long-term candlestick oscillator.
2nd: Moving average convergence divergence (MACD).
3rd: Stochastic indicator.
Ater placing these three indicators I came to know that since October 2019 the Bitcoin is following a specific pattern for the bearish rally. The Vervorrt heikin-ashi long-term candlestick oscillator is a powerful indicator that shows that the priceline is in bullish or bearish trend . When it turns green it means that Bitcoin is in bullish trend and when it turns red color then it means that Bitcoin is in bearish trend . Now after noticing closely the daily chart it can be observe that whenever this vervoort indicator turns green then the MACD indicator 1st gives sell signal and then again it gives buy signal and again it gives sell signal and on this third sell signal if the stochastic also gives the bear cross then the BTC turns bearish and starts the bearish move. It can be witnessed form 24th of October to 25th of November 2019. Then from 23rd of Jan up to 13th of March 2020. And if we see the current situation then the vervoort is again in green color and giving indication that we are in bullish trend , and the MACD has given a sell signal and after that we have received the buying signal and at this time the MACD has given the sell signal.Therefore we can expect that this time the bitcoin again follow the same pattern that it is following since October 2019. And it will start a bearish rally. This time I have also placed the relative strength index (RSI) oscillator. Then we can also observe that whenever we receive the final sell signal by the MACD and the BTC starts bearish rally then the RSI also visits the oversold zone. Therefore we can expect that if the Bitcoin will start a proper bearish move then the RSI will also again visit the oversold zone.
Now up to what extent the Bitcoin can drop:
Now the question is that if the Bitcoin start a bearish move then up to what extent the BTC will be dropped. For that first of all we need to watch out for an up channel formation that the Bitcoin has formed on the daily chart. This up channel is same as like the previous up channel formation that was formed from December 2019 up Feb 2020. And after breaking down the support of previous channel the price action turned very strong bearish and easily broke down the simple moving averages supports with the time period of 50, 100 and 200. And now it has a again started another up channel from March up till now. Here we can observe after a very strong attempt to break out the resistance of the channel finally the price action is likely to be filled in breaking out and now it is dropping down to hit the support of the channel. Here we have the 100 and 200 simple moving averages supports at the same level where we have the support of the channel and these supports are at $8,000. Then we have the 50 simple moving average support just below the support of the channel. And the 50 simple moving average is moving up to form the golden cross with 100 and 200 simple moving averages. If the 50 SMA will continue this upward move to form the golden then the priceline will not break down the support of this channel, however if the 50 simple moving average will not continue its upward move and it will start moving down then the price action will easily break down the 100 in 200 SMAs and the support of the channel.
The Bitcoin has failed in re-testing the resistance block as support:
We have already seen that on the daily chart the priceline was trying to breakout the resistance block from $9,000 to $9500 level. This is the most strongest support and resistance block that the Bitcoin could not breakout since after the drop off Dec 2017. Once in the month of February 2020 we have witnessed that a Bitcoin broke out this resistance block. After breaking out this resistance block the Priceline tried to retest previous resistance as support but this re-test was unsuccessful and the priceline dropped all the way down up to $4000. Now again the priceline Now I again the priceline of leading cryptocurrency has repeated the same move. The Bitcoin broke out the resistance of this block from 8th to 9th May 2020 and after breaking out the BTC tried to retest the previous resistance as support but again it has failed to retest this resistance block as support and dropped down.
The Bitcoin is likely to be failed in breaking out the resistance of channel on long term chart:
Now I would like to divert your attentions toward the down channel that has been formed on the long-term weekly chart. And we can see here that the priceline was also trying to break out the resistance of this down channel. But so far it is not successful in breaking out the resistance. If the Bitcoin will break down the support of the channel that has been formed on the daily chart then it may retest the 100 simple moving average support that we have within the down channel on this weekly chart. And this 100 SMA support is at this time at $7,100. If the price action will breakdown the 100 simple moving every support then it may retest the 200 SMA support and that is at $5700 at this time. And in case of breaking down the 200 simple moving average the Bitcoin may re-test the support of this down channel and that is at $4,800. However I'm not expecting as that much powerful downward move. In worst situation I'm expecting that the Bitcoin will take a bullish bounce from the 200 simple moving average support as we have already discussed in my previous articles that this is the strongest support ever in the history of Bitcoin that has been never broken down since it is appeared. However the further downward move depends in breaking down the support of an up channel on daily chart.
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All the chart patterns and the indicators are giving bearish signals, therefore the priceline of Bitcoin may turn bearish on short-term. But on long-term after the halving event we can expect a very strong bullish rally for at least 2 years.
Note: This idea is education purpose only and not intended to be investment advice, please seek a duly licensed professional and do you own research before any investment.