Technical Analysis: The Age of Innocence, Cryptocurrency Version

A method for making an investment decision in the capital markets, based on market behavior. The graph is the end result of the decision-making equation of all investors in the market, thus embodying all the information relevant to the decision

The author is a technical analyst at the Stock Exchange Group

Sometimes I find it hard to believe how naive people are in our world.

In the three decades I have been in the market I have been exposed to quite a few financial assets whose common denominator was “get rich quick”. If I remember correctly this charge started with the Maof options in the late 1990s, moved to the unsupervised forex market that offered up to 400x leverage, through one year of selling fictitious diamonds, for cryptocurrencies and the NFT hype – which has perished and faded. I’m convinced there were a few more I missed along the way.

The common denominator to all of these is the uncontrollable desire to get rich quick. Find the key to Alibaba’s cave, shorten the path. The point is that it is not just the younger generation, as this aspiration is cross-generational and one can find in these passing trends the best of our sons.

This time I chose to talk about the flagship representation of all these, eBitcoin. And do not understand that I am against. Simply in my perception the stock market game, and no matter where you play it, is not a game about money but about decisions and motives. And he who went to the capital market and did not return from there the same person, went out of misconceptions and failing motives.

Bitcoin ‘flight into space’ actually ended in the last quarter of 2021. In the attached graph you can see the third candle from the end. This is a candle of sellers. Its body is small and stuck in the lower part of the candle and the upper silhouette is as long as the exile. This candle, when it appears after ascents, is not subject to interpretation. The sellers arrived.

The message: Sellers are willing to sell any amount of Bitcoin at a pre-determined price

In the monthly chart, where each candle represents an entire calendar month, one can see what happened over a price of $ 61,400 per currency. Note that the only thing that stands out above the price is the top silhouette of the candle that represents the sellers. Highlights are no longer rising, and it was a clear message that sellers are willing to sell any quantity at a pre-determined price. The sequence, for those wondering, is declining in both the quarterly chart and the monthly chart, and the message here is negative.

Descending sequence indicates a significant increase in the level of risk. The red candles indicate the control of the sellers. The closing price of each candle is below the low of the previous candle. So any increase in bitcoin now will have to be taken with more than a pinch of salt.

In the weekly graph the situation is no less bad. Here one can already see a downward trend when the highs and lows, which respectively represent the sellers and buyers, are arranged in a descending structure, which indicates a consensus about the direction. And not only that, but the sequence is going down and the momentum indices are pointing to an almost uncontrollable accumulation of acceleration to the south. The fact that the three dimensions of time so far paint the same picture raises the likelihood that any increase in the near future will be short-lived.

The greed gland interferes with learning the basic lesson

And in the daily graph? There you can see the buyers coming. Opportunity hunters, some of the kind who think you can profit from any market movement, and many more evenings of those who have not yet learned one of the most important lessons in stock trading – just go in the direction of the trend. And if the trend is a downtrend, then either you will be out or you will be looking for short sale deals.

In conclusion, Generation goes on and generation comes, but the greed gland never remains. Whoever goes after false promises of a fixed return, of quick enrichment and all sorts of tricks, sticks and other revelry in Shin, will never reach the Holy Grail.

By Editor

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