Bitcoin breaks a five-year trend
Bitcoin closes the month of January on a very bullish note, posting its highest monthly close since August 2019. Bitcoin’s close in January snaps a five-year trend of January closing below the open.
Bitcoin closes January 2020 with a +30% gain.
January is typically a very tricky month across all financial markets. The adage, ‘so goes January, so goes the stock market’ seems to play out very well in the stock market – but not always in cryptocurrencies. For Bitcoin, the trend over the past five years has seen the month of January close its monthly candlestick below the open:
January 2019: -7.59%
January 2018: -26.88%
January 2017: -0.24%
January 2016: -14.48%
January 2015: -32.43%
How has Bitcoin traded in prior January months?
January 2014: +16.5%
January 2013: +51.07%
January 2012: +16.10%
January 2011: +73.33% ($0.30 to ($0.52)
July 2010: +40% ($0.05 to $0.07)
July 2010 is the earliest data available for Bitcoin’s trading history – so it acts as the 2010 ‘January.’ We can see that before 2015, Bitcoin spent five years generated January months with closes above the open. Five consecutive years with January higher, then five successive years with January closing lower. I don’t think the stock market adage of ‘so goes January, so goes the market’ applies to Bitcoin – or, if it does, then we have to little data to determine if that is true. With the current data we have, the month of January does not seem to be a good predictor of how Bitcoin will behave throughout the remainder of its trading year. But Bitcoin’s January 2020 close is a big one. The January 2020 close for Bitcoin represents the highest monthly candlestick close since August 2019. And Bitcoin is very close to August 2020’s close of 9624.54. The January 2020 close also represents the third-best performing January in Bitcoin’s history and most significant January gain since 2013.
On the current monthly Ichimoku Kinko Chart (above), Bitcoin is up against an important inflection point. January 2020’s monthly high was rejected against the monthly Tenkan-Sen (blue average), almost exactly on the average in fact (monthly high for Bitcoin was 9570, the Tenkan-Sen was at 9571.52). Currently, Bitcoin is trading up against the single most significant collection of resistance levels that it has ever traded against on the monthly chart and the single greatest collection of resistance levels you could ever find on any Ichimoku chart on any timeframe. All of the major Ichimoku indicators are almost on top of one another. From an order of weakest to most potent resistance levels according to their strength in the Ichimoku system, those price levels are:
Tenkan-Sen (weakest): 10152.50
Senkou Span A: 10171.94
Senkou Span B (strongest): 9875.50
How likely are we to see bitcoin break above these resistance levels? Hard to say. That’s where the oscillators below the price chart help. The RSI is currently in a condition known as a ‘pinch.’ The ‘pinch’ occurs when the RSI’s two averages are nearly the same price level and then the RSI itself crosses those averages. The RSI is currently just a hair above both of its averages and is trading flat. The Composite Index is very close to crossing the first of its two averages and has an upward slope on its line. Finally, the %B indicator is slightly below the 0.8 level. The condition that would trigger a bull run similar to what we observed from 2015 to 2017 would be the %B crossing the 0.8 level on the monthly chart – the RSI is not even close to its first overbought level at 80 (currently at 57.99), so any %B cross above 0.8 would indicate a powerful, reliable and long-acting bull trend.