BTD!

TD! It’s a phrase all over trading rooms, forums and Twitter: Buy The Dip (BTD)! And the dip buying has certainly been practiced. The chart above shows Bitcoin’s 4-hour chart from February 8th, 2019 to today (May 7th, 2019). I’ve annotated some of the significant support and breakout zones that have contributed to the rise in Bitcoin’s value.

1.       The first breakout at #1 occurred after the support found in late December of 2018 through January of 2019. This was one of the first ideal bullish Ichimoku breakouts that occurred in over 6 months. This breakout trade resulted in a +$548 (+15.05%) gain over a 37 day period. After that, we had a deep retracement with a slow but steady rise, which brings us to #2.

2.       After the big breakout from #1, Bitcoin dropped -12% and then consolidated for 31 days from February 23rd, 2019 to March 27th. During that consolidation, Bitcoin did gain +8.46%, but it was a slow and boring move (as most consolidation is). This was our first technical dip buying that occurred but was probably missed by most people given the length of the recovery.

3.       On March 27th, 2019, Bitcoin had another bullish Ichimoku breakout setup. This was the single largest rally so far in all of 2019 – and one of the biggest rallies in over 8-month. Over a 7-day period, Bitcoin gained +1,349.74 (+33.78%). Strong selling occurred and there were clear attempts by perma-bears to bring Bitcoin back into a bear market. They failed. If you observe the price action the arrows are pointing to, you’ll see the Kijun-Sen (red average) has held up as a major support zone with buyers stepping in at that level.

4.       Some choppy trading occurred after the spike at #3, but we see more support for Bitcoin coming in against the Kijun-Sen.

5.        #5 is shows the most recent trading in Bitcoin we’ve seen and encompassed the start of May to now. Bitcoin has made some deep drives lower but we can see anywhere from 3 to 4 examples of buyers stepping in to buy up any dips against the Kijun-Sen.

What does this mean?

The Ichimoku Kinko Hyo system is a trend following system. Not only does it identify great entry opportunities, but it helps the trader determine if an instrument is in a trend. One of the most important behaviors we should observe in a bull market/uptrend is to see price not only rising but the Tenken-Sen and the Kijun-Sen rising as well. We want to observe both of those averages moving up as price moves up. When those behaviors are present, we have evidence of not only a strong existing uptrend but the evidence that an uptrend will continue. But the 4-hour chart is a fast time frame. Let’s look at the Daily chart.

The daily chart above shows the kind of breakout and uptrend conditions we want to see for a new long term bull move. The key test Bitcoin faced was around the 27th of April when Bitcoin move below both the Kijun-Sen and Tenken-Sen. But Bitcoin passed that test. Ever since Bitcoin’s close on April 30th we’ve seen Bitcoin consistently close above the Kijun-Sen and observe the Tenken-Sen remain above the Kijun-Sen. And even more bullish is the price action between May 5th and today. It appears that the daily support level is now the Tenken-Sen – which is a massively bullish signal. I would predict and anticipate a bullish market to continue until 6600.