BTC Price Analysis - 7/27/19

As most of you probably know by now, BTC is in a bull market. I dove into the criteria for what I think is a bull vs bear market in a previous post. We now have higher lows and higher highs on longer time frames. So, let’s focus on where the next spot to buy is. The 200-day moving average (DMA) is one of my favorite indicators of how the market is doing. If we look back at past cycles, when the price is above the 200-DMA we are in a bull market. Below is bear market. Since 2012, BTC has had two extended bull markets and two extended bear markets. We have now entered the third bull market.

I like to look at the current price in relation to BTC’s 200-DMA to help determine if we are in an ideal long-term buying spot or selling spot. When current price divided by the 200-DMA (moving average multiple) is greater than 2.5 this is typically a good time to start scaling out on your longer-term holdings. Anything below 0.6 is a good time to start scaling in buys. Recently, we reached 2.5 and I mentioned on Twitter that it might not be a bad time to start selling a bit. That was above $13k and we currently sit around $9.4k. With that said, I think it’s time to start scaling back in for the below reasons.

The moving average multiple is approaching 1.2. In the past, it has almost always stayed above 1 when BTC has had bull market run-ups but average corrections have been around 1.2. The ratio can front run or overshoot but around 1.2 is typically a good spot to buy, especially after a large run (like the run to $13.8k in late June this year) and subsequent cool off periods. The closer you can buy to the 200-DMA the better, but I’m not sure we will touch it in this first dip. I wouldn’t be surprised to see the moving average multiple hit around 1.2, then bounce and let the 200-DMA catch up to the price while the price consolidates for a couple more months.

Another item I wanted to mention is the weekly Bollinger Band (BBand) median. During the last bull run in 2016 and 2017, it acted as support. Currently, the price of the median band is roughly $7.5k. The next weekly close is Sunday, and it will likely rise to $7.7k. I expect BBand median to act as support as well.

Near the swing-high at roughly $13k in early July, I mentioned being leery since the price action was reminding me of the 2017 BTC top and I shared a fractal I thought we might be following. I think the fractal has played out closely and I have no reason to think we do not continue to follow it until the structure breaks. I have highlighted where I think we are now. This would estimate a low around the high $7K area.

Lastly, I wanted to point out that preceding new highs in the last bull market we had six significant retraces of 34-41%. We are currently sitting at 32% below the swing-high and the last swing-low at $9k (July 16th) was 34%. A retrace of 41% is roughly $8.1k.

I think we are about to see the swing-low end sometime in August, presenting a buying opportunity at what I believe will be the low to mid $8K area for those looking to get a longer-term hold position. I also think we will continue to stay in a bull market with the halving coming up in roughly nine months.

These thoughts are solely my own opinion and not investment or financial advice.