When Gann created his market geometry in the early 1900’s, he also developed a rule to follow with his particular charts: The Rule of Angles. Very simply put, the rule of angles means that whenever one of the angles in his constructions was broken, it would move to test the next angle. We can see that operation in play today. But it also gives us a roadmap. Also, this has all the trappings of a bull trap in both the move and the current position related to 3 strong supportive zones.

The 4-hour chart above shows us currently trading below the arc right above it. More bearish is the fact that the area Bitcoin broke down is also where the .618 Fibonacci retracement is located and the 8192 inner harmonic. Neither of those supportive zones held, they just rolled right through and lower. However, it should be noted that the conditions of the oscillators (Composite Index and Stochastic RSI) are very much in a support condition indicating appropriate environments for higher prices. At the time of writing this article, this 4-hour candlestick has another two hours and twenty-five minutes to go, which is more than enough time for price to rally back to both the inner harmonic pivot at 8192, the .618 Fibonacci level and right back to the safe zone of the angle above. Essentially, we do not want to see a 4-hour candlestick have a full break and hold below that angle. A break and hold means that price has broken below the angle and the entirety of the price action of a 4-hour candlestick has been traded below the angle. That is not the scenario we want for bullish conditions.

If that does happen, then we essentially return to the normal trading range we have been experiencing since February. Following the Rule of Angles, we test the angle below, which is near the 6800 value area, but more than likely we’re targeting, at the lowest, 7150 because that is the .786 Fibonacci level. The strongest area of support we have below is the 7562 value zone and that will be a very difficult price area for Bitcoin to cross below.

If we want to see a particularly ugly but near-term supportive chart, we can look at Ethereum’s.

 

Ethereum’s chart is showing a big ol’ sell-off. The nearest angle to test below is at 624, which is not too far away and will more than likely react strongly to that angle as support.

Quick note: Cryptocurrencies are the definition of a long-biased market. If you ever find yourself upset that these large drops, you should change your mindset from one of disappointment to excitement. If you are reading my articles and those of my peers here at CoinClarity (Cryus McNally, Amanda Razani to name a couple) then I imagine you, dear reader, are a cryptobull as well. I am a permabull with cryptocurrencies, these are not going anywhere; especially Bitcoin. This is a new asset class that has yet to become mainstream in the investing and speculating world.

Listen, I trade futures and forex for a living (and cryptos). We haven’t even tapped into the real market cap. So when I see Ethereum or Bitcoin trading a >6% discount from one day to the next, I get giddy and super happy. Think of it this way: if you owned a solid gold bar and you bought it at, let’s say, $1200 an ounce and then a couple years later it’s at $1100 an ounce, wouldn’t you be a buyer at that discount? So these big dips are exciting and retrace frequently. Take profits early on the pumps and buy the dumps. I know that sounds so cliche but it works!

BUY bear runs and bottoms, SELL bull runs and tops.

To0 many new traders do the exact opposite.