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New Dimension | 2021/03/17 BTC Daily Moving Average Crosses Below

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New Dimension | 2021/03/17 BTC Daily Moving Average Crosses Below

TA TESTING is currently a collaborative analyst for Binance in the Taiwan market, focusing on analysis of the US stock and cryptocurrency markets. With professional insights, TA TESTING will regularly share cases or strategies related to the cryptocurrency market in the New Dimensions column in the future, providing the community with a healthy channel to understand the cryptocurrency market and learn market analysis.

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Background

"2021/03/13 BTC":

  • At present, the price has surpassed the previous high, and all discounted prices of 1D MA25 are at a low level. In four days, there will be a consecutive week of "declining low-level discounts," making it easier to continue rising.
  • After consolidating around 4H MA25 at 48088, it has risen above the previous high of 58352. Based on the basic N-shaped pattern, the first target is 67840, which is 1.618. The so-called first target means that to continue rising, this level must be reached first. If the target is not met and a noticeable decline begins (this needs to be judged separately), be cautious as it may be a false breakout.
BTCUSDT 4H Chart

BTC Daily Moving Average Discount (MA25)

The above chart shows the BTC daily chart, focusing on the discussion of the discount of the purple MA25 daily moving average, mainly using the concept of "moving average discount."

Moving Average Discount: The moving average is a weighted average of a set of numbers. Taking MA25 as an example, for each additional candlestick, a new set of averages is recalculated using the latest 25 candlesticks. This means that with each new candlestick, an old candlestick is excluded, which is the "discounted price." When the discounted price is above the moving average, it is referred to as "high-level discounted price," and when it is below the moving average, it is called "low-level discounted price."

The so-called "moving average discount" is to estimate the reversal direction of the moving average based on the excluded discounted price, focusing on finding "trend reversal points," which can be interfered by "long candlesticks."

It is also important to note that "estimation" is essentially a prediction of the future, hence there is a certain degree of uncertainty.
(In fact, when I calculate the moving average discount, I often "assume" that the value of the next candlestick that has not yet appeared is the same as the current moving average value, which is a rough approximation with inherent uncertainty.)

  • The orange marks the current discounted price at 0, and the future three-day discounted prices are marked as 1, 2, 3.
  • The current value of 1D MA25 moving average is 52346.
  • It can be observed that the closing prices of the three candlesticks marked 0, 1, 2 are all above the purple line, all belonging to the high level.
  • Starting from 3, discounting low-level discounted prices will provide upward momentum for the moving average.

Therefore, the conclusion drawn from the daily moving average discount is: there will be upward momentum in the next three days.

What is the current situation on the daily chart?

On 2021/03/13, after attempting to surpass the previous high and failing, it retracted to the daily consolidation range. Although not clear, it is still considered as daily consolidation.

Currently, rising above MA25 at the 4H level indicates a strengthening trend within the daily consolidation. The key observation next is whether this 4H level uptrend can extend into a larger trend, namely, a daily uptrend.

BTCUSDT 4H Chart

As for whether the strengthening at the 4H level can successfully extend to a daily strengthening, I believe the next three days are crucial. In other words, we need to observe if at the 4H level:

  1. It can surpass the previous high of 61844 to form an uptrend.
  2. Or, under the premise of not falling below the previous short-term consolidation zone's low of 53271 or the starting point of 54123, consolidate until gaining upward momentum from the daily moving average discount.

If the upward push from the daily moving average discount fails at this point, it is very risky as it implies the possibility of entering a larger correction, for the following reasons:

  1. A previous failure to achieve the most basic price increase signal.
  2. According to the time cycle, there is a chance of correction between the end of March and mid-April.
  3. The current rally is diverging in terms of price, volume, and indicators (refer to the white arrows in the chart for indicator divergence, and observe volume divergence on the weekly chart).
  4. The short-term strengthening at point e in the chart is near the upper edge of the daily white box consolidation range, which is a strong signal for the bulls. If this fails, it indicates insufficient bullish intent, which significantly increases the chance of seeking approval or consolidation downwards.
  5. I believe the current market is a "fish tail" situation, the extent of which I am unsure of. It involves speculation but is risky. Therefore, it is important to be aware of the cost position and set the final defense line properly.

As for why I think this way? I will explain in future articles.

Disclaimer:

This article is for educational purposes and does not constitute investment advice.

Cryptocurrencies are highly volatile markets, so please invest cautiously. Personal subjective opinions are not suitable for everyone and are for reference only, not as trading recommendations.

All analysis is based on the current market situation and does not predict future market changes. The editor's work is out of interest and is not responsible for tracking all subsequent developments. It is recommended to maintain operational flexibility and adaptability.

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