This article is only a personal market view and does not constitute investment advice. If you act on it, you are responsible for your own profits and losses.
Beijing-based traders: on-chain data users, trend traders.
From the daily chart of BTC, it has fallen below the rising trend line since the end of last year. This is the first time in more than 8 months that the daily level has fallen below. At the same time, the price has once again come to the vicinity of the 120-day moving average, temporarily receiving support.
The importance of a trend line is generally judged from two perspectives:
1. Time: The longer the support time of a trend line, the more important it is. A 3-month trend line is obviously much stronger in guiding the market than a 3-day trend line.
2. Number of touches: The more times a trend line is touched, the more important it is.
This trend line in the figure is undoubtedly a very important trend line. When it is broken downward, it sends us a warning signal, a warning signal of a change in the upward trend. Breaking the upward trend line means that the upward trend has changed. Although it may not fall sharply immediately, it will at least turn into a volatile trend.
There are generally two methods to judge the effectiveness of trend line breakthrough:
1. Time: If the daily closing price is below the trend line for two consecutive days, it can be considered as a valid break;
2. Decline: In the current market environment, the amplitude of BTC’s pin is not that large. I personally use 3% as a test of the effectiveness of a breakthrough.
From these two points of view, the 3% decline has been met. If the closing line continues to remain below the trend line today, it will be a done deal. If it falls below the 120-day line in the future, we can say with certainty that the upward trend is over.
Let's verify it from the perspectives of trading volume and contract open interest:
1. Trading volume:
Among all the K-line types, there is a type called point chart. The biggest advantage of this type is that it can clearly show the trading volume during the rise and fall process.
It can be seen that during the nearly 8-month rise, the trading volume has gradually shrunk. This is obviously an unhealthy form of trading volume. Basically, since the top in April, there has been a trend of shrinking volume when rising and increasing volume when falling. This is a warning signal given by the trading volume.
Another indicator of trading volume, OBV, also showed a clear divergence trend. Since February, when prices continued to hit new highs, the OBV indicator continued to diverge, and when the new high was reached in July, the indicator diverged in both the long and short terms. This is a warning signal given by the OBV indicator.
2. Contract open interest:
Taking the USDT perpetual contract holdings of BTC as a reference, the holdings have continued to increase since the highest price in July, especially during the decline this morning. This is a bearish signal given by the contract holdings.
Let me add one more thing here. When the spot trading volume is huge and the contract position is greatly reduced, these two situations occur at the same time, which is generally a signal that a market trend has ended.
In addition to the above technical reasons, Beipiao has some other more subjective opinions:
1. The high point in July did not form synchronization with other currencies. In a healthy rising environment, most currencies should reach new highs synchronously, at least ETH should follow BTC, but it did not;
2. Many small currencies were frantically pulled up during the period when BTC was trading sideways at a high level, which was full of speculation, similar to the rhythm before the end of the previous market.
3. The possibility of a rate hike in September is basically gone. Beipiao believes that the US stock market also reached a high point around the last rate hike. In the figure below, both the Nasdaq and the S&P fell below their own rising channels, which means that their rising trends have also come to an end.
The Nasdaq fell below the upward channel since March.
The S&P also fell below its own rising channel since March.
Some representative U.S. stocks that have performed very well this year have also experienced various trend breaks. Nvidia has a textbook-standard top rising wedge reversal pattern.
Apple also fell below its upward channel of nearly six months.
Therefore, all that Beijingers see are warnings and confirmation signals of the end of the upward trend.
The above analysis is just the process of Beipiao’s own conclusion. The conclusion is actually simple. If BTC continues to close below the trend line today, it is no longer bullish.
Subsequent response:
1. Pay attention to the ETF approval in early September. If it is approved, it is still possible to pull up again. Before that, unless it returns to more than 30,000, I will not consider going long.
2. The current price is supported near the high point at the end of May. If it continues to fall, the next two support levels are probably around 2.6w and 2.5w.
3. If the market turns to sideways fluctuations, wait for the emergence of a continuous pattern before considering the direction.
Finally, let me briefly talk about ETH. Its trend is basically synchronized with BTC. It has fallen below its own trend line and is temporarily supported by the 200-day line. The price is obviously suppressed by the 120-day line.
During the price decline of ETH, there was a significant increase in contract positions, which is also a bearish signal.
The June low near 1620 may be the next support level. This is the 200-week line + previous low support level. It is also near the lower edge of a weekly triangle.
The current point worth betting on ETH is around 1620, and it may break through 2000+ again.
Follow me and earn maximum trend profits with minimal operations.
