Technical analysis is consistently showing evidence for the non-randomness of markets. Even the most die hard adherents of the EMH (Efficient Market Hypothesis) are questioning the random walk theory that is still very prevalent among financial and market analysts. I believe the chart below shows how non-random our markets and behavior really are.
Logarithmic Bitcoin Chart
If you remember my post from last Friday, I discussed Logarithmic charts and their benefit, especially in markets like Bitcoin.A logarithmic chart of Bitcoin provides a more clear and reliable context to the moves that Bitcoin has made in the past and to today. The linear chart shows a very flat price level until the massive expansion begins in early 2017. However, the logarithmic chart shows the proportion and percentage of moves more accurately. The difference could be explained by simply describing the move from 100 to 200 on a linear chart is the same as a move from 11000 to 11100. However, the percentage gains are very different. A logarithmic chart shows those percentage changes.
The green diagonal boxes represent the gradual (for Bitcoin) rise and gradual increase in value that Bitcoin experiences prior to a major parabolic move. For both of those highlighted green box zones, we observe not only a very similar range of days (707 trading days VS 679 trading days), we also see a similar structure in both price and structure. When we look at the blue highlighted boxes, we observe an even stronger correlation.
The blue highlighted boxes have an almost creepy similarity. It’s uncanny. If we measure the peak of the first blue box to the low, we see that move to the downside lasted 413 days. If we plot 413 days from the all-time high back in December of 2017, we see the week of January 28th. Another correlation between these blue highlighted zones is something very, very Gannish: the dates. The date of the peak on the first blue box is the week of December 2nd, where the peak of 2017 and the all-time high was the week of December 11th. We can also see that the period of the rise in the green boxes both happen during the beginning weeks of October (October 17th and October 26th, respectively).
I also want to call your attention to the behavior of the participants which is reflected in the volume. We can see that the massive spikes and rises in volume appear near the peaks of the two blue boxes, followed by a tapering off of volume until it comes back. We can also see the conditions of the RSI on the weekly chart showing the extreme bottoming levels that form before the next rise. The current price conditions are certainly within the same kind of conditions we saw indicating the end of lower prices and the resumption of accumulation and a steady growth in the price of Bitcoin. There is no reason to assume this will not continue.