Closing In on the Last Dip Before the Bull Run
It’s been a quiet spring and summer for me, but I have been watching the cryptocurrency market like a hawk. I haven’t had to say much, because the market has been doing exactly what I thought it would do… continue the correction.
But the question remains, just how low will big brother Bitcoin go before the bear market finally draws to a close? We will take a look at the latest chart from Trading view and we’ll discuss the possibilities.
Before I reveal my predictions, I will say that everything I called for since February of 2018 has been on-point. I wasn’t fooled by all of the premature bull market predictions. Exactly all of them have failed to come true. I’m still surprised that so many “experts” thought a bull market could emerge before the market has run its course.
Never in the history of the stock market OR the cryptocurrency market have we seen the pattern broken. You can set your clock by it. The four phases of accumulation, consolidation, markup, and distribution must happen. It’s scientific, and it’s the result of human nature combined with the extremely small percentage of “whales” who play the general public’s tendency to be controlled by emotion.
Since the inception of the stock market, we’ve seen it… after a major run, the insiders pull out and leave the public holding the bag. The lack of tremendous buying pressure leaves the market to fall, and the 4-step process repeats itself.
That being said, let’s take a look at the chart and I’ll share with you what I see in the range of possibilities.
Up until a week ago, we thought 6200 was the rock-bottom level for BTC. Last winter, my eyes were telling me that 5500 was possible, and at worst-case, 3200. I thought I was wrong. Nothing could have convinced me that we would ever see anything less than 5000 as of last month. But the dive we just witnessed opens those doors of possibility yet again.
Now that we have seen BTC violate the floor level of 6200 and even plunge below 5500, there’s no base that we can count on that will hold down the fort. We have to go to previous bull run levels to determine the new possibilities for bottom-level price action, which we see on this chart at 3200 and again at roughly 4200.
The velocity of the big dip we just witnessed tells me that it is entirely possible, and it can happen fast. We’re talking “in-the-blink-of-an-eye” fast. The overall momentum is still downward, and the rallies are not breaking the bear market pattern.
Take a close look at the stars that I have indicated on the stochastic chart. Whenever BTC was seriously oversold, it rallied hard. But you’ll notice that on each rally, the peak stochastic was was reflecting a maximum buying pressure point that did not break the overall downtrend.
After every rally, the peaks are lower. Look at the succession of red arrows which represent the declining peaks, confirming the continuation of the big ugly bear market. But after every smack-down, BTC found support at the base. Not on the last one.
That’s why we have to look at the previous support levels before the 2017 run to find out what is possible for the next low points. The orange box represents the “Bottom-of-the-barrel” zone of possibility, and this is a worst-case.
BTC could certainly rally and start a reversal. But it’s not likely, based on the recent action. It’s always best to prepare for the worst. That means you should consider a trading zone of 3200 to 4200 BEFORE you throw your money into the crypto market in anticipation of the December rally.
And yes, I did say December rally. I fully expect this to happen. We will see a rally. At worst-case, we will find a bottom point and then start the accumulation/consolidation phase in December with a nice spike that falls by the new year. Best case scenario would be BTC eclipsing the all-time high of 2017.
It’s best to assume that we have not yet had enough time to properly complete the accumulation/consolidation phase. We might be in for a boring 12 months if we don’t see a major spike in December of 2018. All we have to do is look at the history of the market, and it will give us clues as to what can happen.
The SAFEST way to play the market at this point is to wait until we have confirmation of a true bottom, with a nice flat quiet accumulation period. When the volume of the market jumps up like a shelf and we trade sideways again at new base levels, that will be enough evidence to tell us we are in consolidation, which is the safest time to invest in my humble opinion.
Make no mistake about it, cryptocurrency is the future, and it’s the natural evolution of trading value among human beings. Nothing will stop this from happening. The only question is, how long will it take before we hit critical mass?
Time will tell. Until then, we’ll keep our eyes on the charts.
The Crypto Pro