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Is bitcoin on a downtrend yet?

Outlook on bitcoin. In this video we're going to try and answer an important question which everybody should be asking, which is, is bitcoin really in a bear market? Is it really in a downward trend? And if the answer is yes, then how do we know when this downtrend comes to an end? How do we know when it goes into a bull market? Now, before I actually start this video, let me just say this, either we are at perhaps one of the best buying opportunities of a lifetime on bitcoin or we are at the beginning of a major sell off that could potentially see bitcoin going much further lower in the next few months. Now you're probably asking yourself right now, well which one is it? Is it the first one or the second one? Okay. I'm going to try and help you with this question. So firstly, as you can see, look what bitcoin has done just recently.

 

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Look with bitcoin. Just did it, went below the lows of April, and of course it went below the lows of February. Having said that though, it only went below the lows of February for maybe a couple of days and managed to go above that level. Now having said that, I'm making this video on a Sunday and one of the things I've always said before is be very careful about what happens on a Sunday or a Saturday, so Saturday and Sunday we can data should not be relied upon because a lot of the activity you see on bitcoin and cryptocurrencies on the weekends actually is driven by algorithmic and bots activities, so for that reason I always look at a chart of bitcoin both on a chart software that excludes we can data and also one that includes we can date them, so I'd like to see both because it does give you a better perspective, a better dimension of what bitcoin really is doing.

Now, here's the thing. Why did I say to you a few moments ago, this could potentially be a perfectly buying opportunity on bitcoin? Well, firstly, before we look at the chart, just take a look at this. The public opinion and the public sentiment on bitcoin has been destroyed practically. Everybody seems to be hating bitcoin now. I mean you just have to look across the Internet and you'll find plenty of negative articles. Look at this one over here. This one was written just recently. Bitcoin has fallen to its lowest point since November and will probably be totally wiped out. I mean, come on. There's another one for you. Has bitcoin entered the doom loop? I'll come on. Give me a break, but here's the thing. If you look at the chart of bitcoin on a monthly timeframe, let me just. Let me go to the monthly chart of Bitcoin.

Take a look at this chart. This is a monthly timeframe chart of bitcoin and look at the Blue Line on that chart as a 21 exponential moving average and there was a 21 moving average, so very key level on the chart because in technical analysis, price usually respects that 21 average, especially the 21 monthly average holds a very strong level of support and you can see what bitcoin has just done recently. It came down to the 21 average and it held that level. Managed to bounce from it. Now here's the big question, is bitcoin going to respect that level and is it going to hold itself above that level because certainly if it does fall below that level and closes below it, then certainly I think with a high degree of probability we're heading for a bear market. Now you might be asking yourself, what hasn't a bear market already started?

Well, we'll talk about in a few moments, but at the moment, apart from 21 monthly average, let me show you another thing. Apart from that 21 month, the average, it is also a fact that we've come back to the February lows and just build the April lows. But the bottom line is despite the fact that we went below the February lows, we did not actually stay below it. Okay. It seems what Bitcoin is seems to be doing here is this teasing us. All right, so it's like teasing us saying, Hey, I'm going below the 6,000 level, but really I'm not. And whenever you see something like that happening, when a market or a price teasing you, you got to be very careful because something might be happening here. You should be on the alert because there might be a false breakout. You might be able to spot some kind of major reversal happening.

But anyway, at the moment you can see that bitcoin still maintains itself below resistance. It is below the key resistance level that I mentioned my last week's video. Okay? You can see right below that level there and yes at the moment it is a fact that sellers have control. Now let's try and ask this important question because many people are assuming we are already in a bear market. The question is, are we really in a bear market or not? In a video that I posted some months ago and I highly recommend you, go back and watch that video one more time. This is by far perhaps one of the most important videos that I ever made. Go ahead and watch it again because in that video, which is called Bitcoins, worst case scenario, I explained in detail what actually constitutes a bear market, so let's go through those steps one by one.

First of all, before we even discuss a bear market, what exactly is a bull market? So we need to distinguish it from a bull market. Okay? You see guys, what I highly recommend you do is put on your charts. These moving averages, those lines on my chart, the blue and Magenta, the orange or gold, and the Green Line is in my chart that explain what they are for you. First of all, as you can see, I've labeled them so that Blue Line here is a 21, average 21 exponential moving average. Then you got the 55 ema or the 100 ema and of course the 200 moving average. Just bottom line is you need to have these moving averages on your chart because they're really helpful when you're in a bull market. What you will see is a 21 average 21 ema is above the 55 to 55 is above the 100 and $100 above the 200.

Okay. In this specific series like this, and here's why that's important because when you're in a bull market, the strategy you can apply, which actually works beautifully, is buying the dips. Okay, so when you're in a bull market and when you have alignment of the moving averages like this, when you have a strong upward trend, like we had an bitcoin last year, the buy the dip strategy works fantastically and that simply means any pullback or any dips back to the, for example, a 21 moving average or the 55 or the 100 moving averages can be used as buying opportunities and as you can see last year, that worked fantastically when we were in a bull market. When of course when the uptrend in Bitcoin was taken full effect, that would have produced the perfect buying opportunity again over here as well, it can see and then boom.

Now you can see this works also in other markets too. Not just bitcoin, but also gold stock markets, and of course one thing we have to remember is in a bull market, price continues to remain above the 200 moving average. What happens is, here's, here's an important thing, the same decisions that you make in a bull market to make money will ruin you, will destroy you in a bad market. So in other words, guys, if you are applying the buy the dip strategy in a bear market, guess what? You will lose money and lose a lot of money when that happens. It is a big mistake to apply a strategy which works only in a bull market to a bear market because that strategy will ruin you. So remember in a bull market, the buy, the dip strategy works fantastically. It doesn't work so well when you are in a bear market.

So first of all, what is a bitcoin bear market that happens when the exact opposite happens?

Press goes below the 200, moving average and stays below 200 moving average. And secondly, you have to have negative alignment. So all that means is the exact opposite of just mentioned in a bull market. So the 21 moving average must be the 55, 55 billion, 100 and 100 below the 200 moving average. And when you have negative alignment, what that means simply is that the strategy is no longer, there's no longer a buy to dip it, sell the rallies, in other words, as opposed to market's moving in an upward trend, market's moving in a downward trend. In other words, you see a series of lower lows and lower highs, and of course a very typical pattern you'll observe in a bear market is that every attempt, every attempt to establish a rally for the market to go up fails.

Look at every time here, the price just to get above the averages, fails faults again, notice and rallied back the 20 moving average fails. So in a bear market, the strategy we apply is not buy the dip, which of course can just lose your money left, right and center no instead is selling the rallies. In other words, shorting the rallies, selling short those rallies. All right, so take a look at this as a chart of bitcoin a few years back when bitcoin itself wasn't a bear market. In this situation, you would not be applying the buy the dip because first of all, notice the alignment, the averages, the moving averages are all aligned in the negative direction. As you can see here, so in this situation, when the averages are lined up in a negative direction, we want to do is any pullbacks to the averages.


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Any rallies, as you can see her fail rallies back to 55, the 100 fail. Press gets rejected from these resistance levels and continue to drop. Now, there is also another important element of a bear market, which we'll have to discuss here. Before we do that though, firstly, let's look at this chart and let's see if the criteria has so far been met in regards to moving averages and the alignment of these averages. So are we in the initial stages of a bear market according to this criteria? Yes we have. Yes, absolutely. So you can see that the averages are certainly lined up in the right direction for a bear market. However, there is one important elements that has not yet been met. There's one criteria which has so far not being met. Okay. So what is important pattern? Well, as you may remember some years back when gold had a massive drop, what it did afterwards was this.

It formed these important support levels, these lows and what it was doing. As I mentioned before, what it was doing is forming market structure. It's only after when gold broke, that market structure broke that key support level right there in April 2013. That is the moment when it officially entered a bear market and guys until price breaks market structure, you cannot know with any degree of certainty that it has actually entered a bear market. So this is bitcoin as you can see here. So similar to what gold was doing some years back. Again, bitcoin is doing the exact same thing. That was the major fall. And here is the important level to support the February lows, April lows. And yes it has gone below it. But look, what it's doing here is teasing us. It's saying, Hey, I'm going to go below these levels, but maybe I'm not.

So that's the thing guys, is this uncertainty right now? Is bitcoin really below its February lows? I don't think so. February lows were near the near the 6,000 levels and it's gone right back above it here. I mean went below to 6,000 levels, then went back above it. So we can't say with much certainty right now that it has officially broken market structure. We cannot say with certainty that it's officially taken out the support levels. We've fallen back in February. Okay. And until it does that, we don't yet have the final ingredient, that final confirmation that we are actually in a bear market and everything else lines up. Everything else is fine. You know, every other criteria has been met for a bear market. But all we're missing is that final important ingredient about that breaking of market structure has only, if we do that, if we can break that market structure, is it that we're actually entering a bear market? And I think what we would need to see is a close below 6,000 and official close below the 6,000 support levels we have not just get seen that yet. Okay. Alright guys.

Thank you very much indeed. And if you found this video to be helpful and useful, please give it a thumbs up. And also please remember to subscribe to our videos of future updates as well.

 


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