Technical Analysis Is Foundational But Not Law
Many traders choose to adopt technical analysis as the backbone of their trading strategies. I would tend to agree with this approach, as in many ways it is quite simply, a self-fulfilling prophecy. Even if not perfectly met, technicals have a very high accuracy rate. Trading is however not as cut and dry as that, otherwise, everyone would be day traders, right? Unfortunately, news and other developments have the power to halt or cancel these predictable moves. That does not mean that the strategy does not work but rather that traders need to set counter strategies in place.
That being said, this is a fundamental aspect that also has other manifestations. If this is your first bull cycle, or even if you were around in 2017, you might not be too familiar with the structure and maturation of how these bull markets manifest.
Two Different Metrics
There are two defining "metrics" if you will, firstly that of time and secondly price. From a point of time, we are currently closing in on the end of this cycle. From a point of price, we have a way to go. That is how these cycles work. I have seen it happen over and over again... people will be shocked by the price action, largely due to them not measuring it against the predictability of the asset. In a recent post on Noise.cash I explained this dynamic merely hours before the BTC breakout.
In every bull market, at some point bearish indicators have to be negated in order to experience meteoric rise. If these patterns are all to be respected the timeline would be too short. It is this foundational understanding that confounded traditional traders like Tone Vays back in 2020... who was shorting BTC as it broke out....
This is key to interpreting the cycles and though no single approach is guaranteed, understanding this key indicator and interpretation is however quite pivotal in the grand scheme of things. We stand a better chance at getting it right as traders and investors if we continue to expand our knowledge and interpretation of data.
Another idea that I have recently expounded upon is the false signals that can be created by on-chain analysis. Certain wallets and entities who are aware of the fact that they are being monitored on-chain can create an opportunity for deceptive moves. Deceptive because they know how it will be interpreted and may not actually intend to do what the market is expecting in such a moment or transaction.
It can also be an innocent move that is misinterpreted because those studying the analysis are not fully aware of the intended timeline of the coin holders. This is an article within itself, so I will leave it that.
I have been asked a couple of times about pullbacks and though I definitely see small pullbacks on the journey higher, I only believe that we will see significant corrections again at the $100K to $130K zone. This is not financial advice but a personal viewpoint.
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