A day after the culmination of the myriad of time cycles that concluded between January 26th and February 5th, we are seeing clear signs of a change in trend within the entire cryptocurrency market. These have been dates I have been discussing for quite some time in previous posts.
One of the benefits of using Gann’s analysis is the surprising accuracy of his time cycles. We knew weeks ahead of time the farthest date we would have to look to see a change in the trend of our current bearish corrective trend. We knew February 5th was an extremely important date along with it being exactly 49 days from our all-time high in Bitcoin. The prices that traded lower overnight were a little excessive (if you can believe it). The swing high to swing low pattern since we began our downtrend has not exceeded -47% and averaged that same percentage move in those swings. That last swing was completed near midnight last night. Let’s look at the chart.
1. There is one indicator that is more clear of an impending reversal than any other indicator. Institutions can’t hide it. They can’t manipulate it. Everyone has access and can see it. And it’s a very simple and standard indicator: volume. I would encourage everyone to look at the average traded volume from December 20th – February 5th. There was well below normal volume. It was insignificant. But it was enough to keep bulls away and it was low enough to easily press down. Now if we look at the volume for Feb. 4th – Feb. 5th, it has increased dramatically. In fact, the daily volume just today (and it hasn’t even closed yet!) is the second highest daily volume bar in Bitcoin’s history.
2. When volume increases as prices go down, that is a sign price will reverse. It’s one of the near constants of any market: volume precedes price.
3. We also need to take into account some fundamental news. Now, before I go into that, I want to make this clear, because it is a perfect example of how time is the true catalyst of price movement, everything else is a slave to time cycles. News, sentiment, etc are slaves to the same cycles.
Prior to the final confluence zone in time (February 5th) all we heard in the crypto world was bearish news: India banning cryptocurrency trading, South Korea banning cryptocurrency trading, Singapore to regulate and consider banning cryptocurrencies, frequent updates about the falling market cap of cryptocoins, SEC investigation(s), etc.
We knew that Jan 26th – February 5th was an extremely strong probability of a reversal based solely on time. In fact, even though price kept retreating, the volume was increasing during this move. That gave us an early warning that the downtrend was about to end inside the 26th to the 5th. Literally a day after the 5th (today), we saw the following news articles:
- Singapore not banning cryptocurrencies.
- India not banning cryptocurrencies.
- SEC cool with cryptocurrencies.
- CFTC cool with cryptocurrencies and encouraging Government to ‘Do No Harm’.
You can call it manipulation, coordinated attacks, Illuminati, etc. The pure reason for these reactions are related to time. And this current bear move that is turning it’s ugly head is a great example for all of you to have seen the very powerful tool of time cycle analysis.