Bitcoin, to capitulate or catupult, watch this area
Bitcoin has been displaying some interesting behavior during the entirety of this trading day. Unless something drastic happens between now (536 PM CST) and the close of the day, we will have formed a Doji candlestick on some significant volume. That is a situation we want to pay close attention to. We are very close to either a capitulation of Bitcoin and we are looking for some significantly lower prices or we are looking for a massive uptrend. Let’s review this.
1. This green line represents the long-term uptrend line set between the lows of July 2017 and October of 2017, we continue to get closer to this line.
2. The red line represents the downtrend line from our all-time high back in December. We have tested this line numerous times, traded above it a couple times, traded below and then above, etc etc. We continue to move down this line.
3. This is the zone of capitulation lower or a catapult to higher prices. Notice the volume on this daily. It’s big. It’s above average. A Doji candlestick is often a sign of indecision. There is a lot of argument that could be made for this entire candlestick pattern to be considered a bullish or bearish doji. I am not concerned with the nomenclature or overall pattern. I am mostly concerned about the candlestick itself. At present, there is no clear direction based on candlesticks and other price technicals.
So what does this mean?
While there is nothing much to say about the current price action, that doesn’t mean there is nothing of importance going on. On the contrary, this is probably one of the most important moments in the entire history of Bitcoin.
I want to point all of you to one thing that can tell us what is going to happen. And this is very important.
This is an image of the volume profile from the all-time high to our current trading day. What we are looking at is a b-shaped profile in the volume profile. This type of analysis is called Volume-At-Price Analysis (VAP). VAP tells us how much volume was traded at a particular price, instead of a particular time.
A b-shaped profile is bullish. It’s bullish as hell, actually. What is shows us is a rejection of higher prices on low volume and then rejection of lower prices on higher volume. What we are looking at is a bunch of bulls waiting and ready to stampede. Imagine their all in a pen and just waiting for the gate to open. A b-shaped profile shows us that sellers are done and that bulls are just waiting (because they have been accumulating).
Does this mean higher prices? No. But its the only other analysis that shows a strong bias in one singular direction.