🅱️ The Technical Analyst | Bitcoin Signals & My Interpretation

17 ene

Reading a chart is not only knowing the meaning, definitions and names of each indicator, it is actually more important how we interpret a certain reading rather than the reading itself.

The classic example is the RSI. A very strong RSI reading can translate into bearish potential, while a very weak RSI can mean that the bottom is close or in —reversals tend to happen on a "bearish"/weak RSI reading.

How we interpret these numbers will vary according to our biases, our experience and additional chart and market signals... In fact, it is always wise to combine multiple signals together in order to get the full picture of what a chart is trying to say.

A strong RSI is still a strong RSI though, and it can translate into the bulls being ahead.

Here Bitcoin has a weak RSI even though it has been growing for more than a year.
If you are one of my long-term followers, you are aware of the fact that a strong RSI at a low price is a very strong signal supporting a bullish case. The fact that we have a weak RSI at a strong price works in reverse.

While Bitcoin's price is rising we want to see a reading on the RSI that is strong, above 50, when it goes lower watch-out...

Trading volume is no longer rising, in fact, Bitcoin's trading volume on this chart has been decreasing since March 2023. Bull volume on a daily basis peaked in October 2023, so how do we interpret this information? What to make of it?

We could say that it is not a big deal because Bitcoin has been rising while volume has been decreasing, so why would it not continue in this same pattern? I always say when the action is coming from support, a bottom low, that low volume is a signal of no resistance and the real action is yet to start; "plenty of room available for additional growth"... Interpretation all over again; So here it is different, this is how I interpret the volume signal considering the fact that we do have resistance.

It is not that we have low volume but that it has been decreasing for almost a year. So the force, the action, the energy, the money, buyers and sellers that were engaging this market are retiring, slowly but surely.

The trend, the pattern, the situation, the factors that were driving the current phase are coming to an end, this is my interpretation based on the decreasing RSI and volume, just to mention two of countless signs and signals we can extract from these charts... The fact that this is happening at this major resistance juncture, the same price level where Bitcoin traded between January and March 2022 is the last bit of information that we need to make our final call.

Either we get a very strong high volume breakout above 48,000 or Bitcoin is set to enter correction mode for months... The weakening signals just mentioned reveal which one of these two have the highest probability of taking place... Are the signals becoming weaker or stronger over time?

When we are looking at bottoms and lows, support, we have weak signals becoming stronger and stronger and stronger... The signals tend to peak way before the top is in but not all signals. When we look around we start to see record volume, record trading, record inflows, record transactions, yes, these all across and this tend to come out right at or near the top.

When at the top, things look good...
When at the bottom, everything sucks...

What is the sentiment now?
And what was the sentiment a year and two months ago?

The answer to these questions cannot vary but how we interpret the information can be as different as the Moon and the Sun.

Thanks a lot for your support.

Namaste.