This One Chart Is All You Need

Trading is not investing and vice versa. However, both can help the other. When I see a big fat trading signal for a stock, I’ll go look at that stock and see if it makes a good investment.

The trouble with tried and tested trading signals is that better be your own, or else they won’t work because old ones will tend to be traded away. The only time they might be obvious is when the market is so messed up it is no longer efficient and clear signals are not traded away because everyone is in trauma. If the signals are your own secret sauce the difficulty is similar, they just don’t come by that often.

So you can have a great selection of tools and none are of use at the moment so you sit like a crocodile on the muddy shore waiting for an opportunity to float by. It should be a restful strategy but let’s face it, if you are not a market junkie you wouldn’t be involved at all, so the agonising wait is painful.

The current markets are in such a situation. Is this bitcoin’s Wile E Coyote when the protagonist has already ran off the cliff and it merely treading air before a horrible fall, or $20,000 the bottom?

This is the chart signal example you need to see back from 2018:

This is four years ago, and four years is approximately a halvening cycle in the past.

So here we are now:

As I write, bitcoin is making a dive and normally these compression events are bearish. Howeverr, only about 80% of the time. The point is when the volatility erupts again the direction will be set for a big move. You shouldn’t be greedy and try to catch it early but when it’s clearly into new territory it will keep on going for an extended period, and this is what a trader catches.

I continue to think that is down towards $10,000. As an investor this makes me evaluate it as a buy around $10,000. So this trading signal alerts me to be ready to move into a bottom and average in there.

Will $10,000 be a bottom? It depends on the Federal Reserve and this insanity of the Ukrainian/Russia war.

This trading signal also alerts me to the danger of buying $20,000 as bitcoin’s bottom.

Will it make the W instead?

In a way I hope not, as right now it would only be something hellish that would bring that about.

Instead I’m optimistic that a new move down will be the bottom and when we get there it will be about a sensible way of building a nice position for the next halvening.

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