Above is a daily chart of bitcoin, and what really stands out to me is how well this fairly simple two month cycle has tracked price over the past several swings. When I first overlaid the cycle on the chart, I didn’t expect it to line up this cleanly, but if you look closely, the troughs in the cycle are almost perfectly aligned with key lows in bitcoin. That kind of consistency is something I pay attention to, especially when it starts to line up with the broader technical picture.
Based on where we are in that cycle right now, the implication is that bitcoin still has some work to do on the downside, potentially into the end of January. Cycles aren’t timing tools to the exact day, but they do a good job of framing expectations. When a cycle suggests weakness and the chart structure agrees, I’m much more cautious on the long side.
Zooming out to the weekly timeframe, even though I’m not showing that chart here, we are dealing with what looks like a classic bear flag. After a sharp decline, price has been consolidating in a relatively tight range, drifting higher in an orderly fashion. That’s why I’ve drawn the blue trendline on the daily chart. This line represents the lower boundary of that consolidation, and it’s an important level to watch.
If bitcoin starts to roll over and breaks that trendline, especially while the cycle is still pointing lower, that would be a strong signal to me that another leg down is unfolding. At the moment, I don’t have a position, and I’m comfortable with that. There’s no need to be early when the market hasn’t confirmed the move yet. For now, I’m staying patient, watching how price reacts around that trendline, and waiting for confirmation before committing capital.
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