FOLLOW-UP: Bitcoin successfully tested the bottom; Now what?MAGIC is just a bunch of illusions. But then again, so are Bitcoin spikes.
After very successfully calling out Bitcoin for "testing the bottom" one week ago -- unlike nearly all of tight-pictured ideas on TradingView -- I am back again to check in on our Crypto market leader. BTC just closed above my pink trendline channel. For those that didn't see my first published idea , this trendline connected the lows on 2017-09-15 and 2018-02-06. The channel of this trendline included a price range of +440 for the upper bound and -440 for the lower bound of the pink trendline, giving us a chance to see more of a resistance zone instead of one simple line. Furthermore, in the last 24 hours, BTC flew past the lower bound of my regression trendline, which reflected lows on 2017-09-15 and 2018-04-01. Note that the two trendlines in focus here recently crossed over, with the regression lower bound now having the higher ground.
While breakthrough past the notable trendlines is a major victory for Bitcoin and crypto as a whole, it should be noted that BTC increased by more than 1K in just a 40-minute span. This spike is incredibly misleading when comes to technical analysis, simply because it is an outlier. So maybe this is an unsustainable victory.
Therefore, what we need to do is look a bit deeper to assess the sustainability of Bitcoin above the pink trendline channel. As with my previous charts, I have included the RSI and Williams %R to help indicate if the recent price momentum led to any overbuying and overselling. While RSI has "crossed over" above 50, which is a technical buy symbol for some investors, the %R is actually indicating a technical overbuy on the daily charts. Note that overbuy signals don't necessarily mean it's time to sell right away; the %R must first crossover back inside of the normal range. It's entirely possible a rally continues for a few days while still being overbought. So it's best to say the signals are a bit mixed, meaning we are possibly destined for some sort of decline in the next few days.
The big question now is quite simple: Will any potential regression from the April 12 spike send Bitcoin back into the pink trendline channel? Let's consider that $7642.79 is the pink trendline upper bound for today's candle (April 13) and that $7662.94 is the boundary price for tomorrow. It wouldn't take much, all of roughly a $250 decrease to swing back into that channel.
Overall, I'd say the news is good. Major players like Fundstrat and Pantera are saying that we reached the bottom, so better days are yet to come. Serious institutional money (see: Rockefeller, Soros, etc.) is entering the crypto space, and you'd best believe that those whales will pounce on solid buy opportunities. And if Q2 history has a say, that recovery back to five-digits is possibly in the works for BTC. Ultimately, if you're a regression analyst like me, you'd mostly believe that even if short-term regression sends Bitcoin back into the pink trendline channel, the bottom I called will most likely provide key support to eventually kick-start a run into the bull market.
Don't be fooled by all the illusions. No Elliott wave, bear flag, inverse cup and handle, or fractal can illustrate the big picture quite like simple regression analysis at times when a security is acting like an outlier. My first published idea illustrated where the normal bottom was for Bitcoin. Any confirmed push below those trendlines would've indicated an overselling outlier, thus it is not something you can normally expect. All those calls for 5K, 4K or even 3K were simply ignoring the regression analytics. In fact, they were calling for major outliers to occur, and that is just downright reckless, in my opinion.
However, before we start calling this recent price increase "a win," let's see what the next few days tell us. The sp
