BTC and the Longer-Term MACDs
Dear Readers,
Time to revisit those major momentum indicators of the longer-term MACDS, the movements of which a while back were consistent with a possible front-running of a bull market as relative to the four year cycle. The market has instead corrected with that correction now being as long as the initial run-up.
Looking back we see a 2.7x run that threatened to go parabolic proper in a bull run. And yet price has remained high in that correction, for the reason, in my opinion, that price did not go parabolic. Instead we have had an overall price action in a relatively regular and technical advance [something I have covered further in previous articles].
With price correcting or consolidating over an extended period of time, so too have the longer-term MACDs. It’s to these we now turn in order to ascertain whether they are weighted one way or another - whether they signal a further prolonged correction, or a reversion to the longer-term trend of increasing prices.
BTC Monthly MACD
The go-to most reliable indicator for me has always been the monthly MACD. It is on the longest time-frame that the interim volatility is smoothed out, and where the longest-term trend is best found. It has helped in the past, and in a maturing market, to find the region in which buying has become exhausted on the one hand, and selling has been overdone on the other.
The most noticeable thing about the monthly MACD here on first sight is its threatening cross of the signal line, which on the face of it is a bearish signal. However, also noticeable is that this MACD pattern is significantly different from the previous ones - it has run midway between the zero-line and the projected upper limit of the channel - and from well below the zero-line where price has consolidated well into something like a ‘no-man’s land’. This creates more uncertainty as to whether it will continue up or continue to correct.
Also to consider is that the current MACD is unlike the previous one in that it corrected first well below the zero-line, and in that it progressed at a more sustainable and modest rate. Where 2019 price action corrected radically after a mini parabolic run, the current price action has not. This shows that the comparison is of limited value, that the current MACD is also its own beast.
In this situation, where we are zoomed out on the longest-time frame, the monthly MACD only provides ambivalence as to which direction it will go. On the one hand, it’s signaling a cross to the downside with a weakening momentum on the histogram; and on the other hand, the MACD itself is not so high in the channel and after being first well below the zero line.
Here it may help to compare the angles of ascent of all previous bull markets, though admittedly this is limited given the nature of a maturing market. In keeping with the sequence, the monthly MACD could continue to correct below the angle of ascent [24 degrees in this case being 5 less of the previous as the previous was 5 less of the preceding one] while also remaining in a macro bull run with prices peaking next year in 2025.
Of course, there is something still unsatisfactory about this longest-term indicator in its ability to provide some guidance to possible price action over the course of the next year or so. And this is why I think recourse to the weekly MACD, which is still on a relatively longer time-frame, may provide an added insight into the patterns of both price action and momentum over the course of the next year or so.
BTC Weekly MACD
The most significant factor at first sight of the weekly MACD has to be its near full retracement to the zero-line. This signals a re-setting of momentum after a move up. This move was solid though not over-extended in that it failed to reach the line of resistance as projected.
The next consideration, insofar as we’re concerned about a further correction and a repeat of sorts of 2019, is both the length of time and angle of attack that the MACD made in these ascents as highlighted in the following chart.
Though the peaks of the weekly MACD reached a similar level, the present move was over a period of time equating to near 4 times that of the previous…. giving a much lower and sustainable rate of ascent. The present move has not been parabolic but of a more technical nature.
We see also two MACD corrections in the present move, and a significant move back to the zero-line before the push to new highs, where price entered into an extended consolidation essentially sideways. Importantly, though price has moved sideward in an upper range, the MACD itself has completely re-booted. This gives all the potential for a new move up from that zero-line.
Where of course this provides no certainty, it does provide a ‘weighted’ technical outlook that serves to counter-balance an overly bearish view that sees price having to move significantly lower.
Moving forward, those invested should be relatively confident in their risk-managed position [which I take to be a reasonable percentage of one’s liquid wealth] while those looking to yet invest could look for a cross of that weekly MACD, with the histogram turning positive, combined with other technical factors as focused on price itself.
Contrary to expectations, we may well be here as compared to the previous ‘cycle’.
Until next time,
Stay, relatively, safe out there,
Dave the Wave.