A Critical Analysis of the 200D (Aqua) & 600D (Teal) SMA
This post critically analyses how BTC has behaved after a cycle top with respect to the 200D SMA and 600D SMA, comparing similar periods to 2013-15 and 2017-18 (shown using blue boxes) to the current price behaviour (if indeed BTC has made it’s cycle top this bull run already).
PRICE CHART
The 200D SMA (shown in Aqua or light blue) and 600D SMA (shown in Teal or dark green) is plotted on the chart with my custom Pi Cycle Top & Bottom indicators and BTC halving's included to help differentiate BTC Cycles.
Historically Once BTC has made a cycle top and price subsequently dropped below the 200D SMA, BTC tends to use the 200D SMA as resistance until BTC eventually break through it. After dropping below the 200D SMA, BTC has historically found support at the 600D SMA, and price is 'squeezed' or becomes ranged bound between these two moving averages. In both cases when this occurred in 2013-15 and 2017-18 (as shown in the blue boxes on the price chart), BTC broke to the down side, and the cross between these two moving averages have then approximated our next cycle bottom.
Interestingly in 2013, BTC did not drop below the 200D after our first Pi Cycle Top indicator flag (actually using the 200D as support in July 2013 initially) which allowed us to continue on to a second cycle Top and new ATH for BTC.
In Feb 2018, BTC initially tried to use the 200D as support, but broke through to the downside shortly after and the same outcome prevailed. This was one indication to BTC holders that 2017 may not be a double peak cycle like 2013 was.
These similarities to the current price action paints a bearish picture for BTC and crypto markets, calling for the end of the current cycle Bull run and that BTC is heading for its next cycle bottom. Price is currently right now ranged bound between the 200D SMA and the 600D SMA very similar to the blue box regions identified above with our first confirmed rejection of the 200D SMA in March 2022 and many tests of the 600D since Jan 2022. From a TA (technical Analysis) / S/R (Support & Resistance) level prospective; a large dump is very plausible if the 29-30K USD price level is lost.
Before a bearish sentiment is locked in from this analysis, let’s look at what is different from now to the prior times we have seen this price behaviour from BTC? Firstly we did break the 200D during this bull run back in May 2021 but was able to quickly recover in August 2021, and dipped and bounced in September and November until again falling below in December 2021. BTC has never achieved this since putting in a cycle top or in a cycle bear market (NOTE: BTC has never done this either in a bull market as price is usually above the 200D SMA in this case).
BTC has also been in a trading range between ~60K to ~30K for more than a year during a bull run. This has never happened before with BTC. Sideways price action can make short term signals from moving averages less relevant. The support and resistance zones created through this trading range made hold more significant. A sweep of the 29K lows with volume would act as a spring traders looking at this trading range are waiting for and if this demand zone holds could start the next leg to finish off this bull run for the cycle.
MA OSSILATOR
The MA Oscillator is another custom indicator I have built in trading view to look at the %difference between price and moving averages (amounts other things). As shown, this indicator is set up to show the %change from price of the 200D SMA (Navy) and 600D SMA (Teal or dark green). The way to view this analysis is what happens to the price of BTC when price reaches a %increase above or %decrease below the moving average or is equal to it.
From this analysis, we see each time price has dropped ~100% from both the 200D SMA and the 600D SMA at the same time (i.e. both lines reach the bottom of the green zone), this has Marked BTC’s cycle bottom. Similarly each time we have price extend 57% or greater above both the 600D SMA and 200D SMA (i.e. land in the red zone), this has marked a significant local top and or a cycle top.
Comparing the squeeze zones in price, each time including now the 200D line was below 0% and rising before and the Teal line was able the 0% line and falling before resulting in a large dump that takes us to our next cycle bottom.
RSI
I have included the RSI for Reference as cross analysis of Peak in RSI and other indicators can help identify cycle peaks.
SUMMARY
Holding ~$29-30K zone will be significant for bulls believing in lengthening cycles and that our cycle top ATH is still to come. If price does test these levels, then strong volumes and buying pressure will be expected to turn price around quickly.
There is a lot of on chain data to support this theory. I would be following central banks and the FED, a delaying in interest rate tightening schedule may be the catalyst for this scenario.
If these levels are lost, then it is likely BTC will continue this trend with the 200D SMA and 600D SMA; confirming our prior cycle top is in, the bull run is over, an eventual dump down to the 200W SMA probable and putting in our next cycle bottom.
PRICE CHART
The 200D SMA (shown in Aqua or light blue) and 600D SMA (shown in Teal or dark green) is plotted on the chart with my custom Pi Cycle Top & Bottom indicators and BTC halving's included to help differentiate BTC Cycles.
Historically Once BTC has made a cycle top and price subsequently dropped below the 200D SMA, BTC tends to use the 200D SMA as resistance until BTC eventually break through it. After dropping below the 200D SMA, BTC has historically found support at the 600D SMA, and price is 'squeezed' or becomes ranged bound between these two moving averages. In both cases when this occurred in 2013-15 and 2017-18 (as shown in the blue boxes on the price chart), BTC broke to the down side, and the cross between these two moving averages have then approximated our next cycle bottom.
Interestingly in 2013, BTC did not drop below the 200D after our first Pi Cycle Top indicator flag (actually using the 200D as support in July 2013 initially) which allowed us to continue on to a second cycle Top and new ATH for BTC.
In Feb 2018, BTC initially tried to use the 200D as support, but broke through to the downside shortly after and the same outcome prevailed. This was one indication to BTC holders that 2017 may not be a double peak cycle like 2013 was.
These similarities to the current price action paints a bearish picture for BTC and crypto markets, calling for the end of the current cycle Bull run and that BTC is heading for its next cycle bottom. Price is currently right now ranged bound between the 200D SMA and the 600D SMA very similar to the blue box regions identified above with our first confirmed rejection of the 200D SMA in March 2022 and many tests of the 600D since Jan 2022. From a TA (technical Analysis) / S/R (Support & Resistance) level prospective; a large dump is very plausible if the 29-30K USD price level is lost.
Before a bearish sentiment is locked in from this analysis, let’s look at what is different from now to the prior times we have seen this price behaviour from BTC? Firstly we did break the 200D during this bull run back in May 2021 but was able to quickly recover in August 2021, and dipped and bounced in September and November until again falling below in December 2021. BTC has never achieved this since putting in a cycle top or in a cycle bear market (NOTE: BTC has never done this either in a bull market as price is usually above the 200D SMA in this case).
BTC has also been in a trading range between ~60K to ~30K for more than a year during a bull run. This has never happened before with BTC. Sideways price action can make short term signals from moving averages less relevant. The support and resistance zones created through this trading range made hold more significant. A sweep of the 29K lows with volume would act as a spring traders looking at this trading range are waiting for and if this demand zone holds could start the next leg to finish off this bull run for the cycle.
MA OSSILATOR
The MA Oscillator is another custom indicator I have built in trading view to look at the %difference between price and moving averages (amounts other things). As shown, this indicator is set up to show the %change from price of the 200D SMA (Navy) and 600D SMA (Teal or dark green). The way to view this analysis is what happens to the price of BTC when price reaches a %increase above or %decrease below the moving average or is equal to it.
From this analysis, we see each time price has dropped ~100% from both the 200D SMA and the 600D SMA at the same time (i.e. both lines reach the bottom of the green zone), this has Marked BTC’s cycle bottom. Similarly each time we have price extend 57% or greater above both the 600D SMA and 200D SMA (i.e. land in the red zone), this has marked a significant local top and or a cycle top.
Comparing the squeeze zones in price, each time including now the 200D line was below 0% and rising before and the Teal line was able the 0% line and falling before resulting in a large dump that takes us to our next cycle bottom.
RSI
I have included the RSI for Reference as cross analysis of Peak in RSI and other indicators can help identify cycle peaks.
SUMMARY
Holding ~$29-30K zone will be significant for bulls believing in lengthening cycles and that our cycle top ATH is still to come. If price does test these levels, then strong volumes and buying pressure will be expected to turn price around quickly.
There is a lot of on chain data to support this theory. I would be following central banks and the FED, a delaying in interest rate tightening schedule may be the catalyst for this scenario.
If these levels are lost, then it is likely BTC will continue this trend with the 200D SMA and 600D SMA; confirming our prior cycle top is in, the bull run is over, an eventual dump down to the 200W SMA probable and putting in our next cycle bottom.
Wyłączenie odpowiedzialności
Informacje i publikacje przygotowane przez TradingView lub jego użytkowników, prezentowane na tej stronie, nie stanowią rekomendacji ani porad handlowych, inwestycyjnych i finansowych i nie powinny być w ten sposób traktowane ani wykorzystywane. Więcej informacji na ten temat znajdziesz w naszym Regulaminie.