How Accurate Has our TA Been?
For those of you who have been following, we have published a series of ten Bitcoin TA articles over the past few months. These articles were written on a weekly basis, with the overall goal of determining the market direction for Bitcoin and Crypto in general. We hope that you have found the articles interesting, and that they have been a useful tool for you as you conduct market research.
Technical Analysis: Art or Science?
The particular method of Technical Analysis that an analyst uses will vary from person to person. Some may take a very measured, scientific approach, while others may use more of a “gut feel” and their experience to read the charts. The beauty is that there is no right or wrong answer! The only thing that matters is the final result. In our TA articles, we use a combination of factors, including chart patterns (price analysis), moving averages, RSI to determine overbought and oversold, investor sentiment, and blockchain fundamentals, essentially blending both art and science into a unique approach.
So how effective has our analysis been? Let’s take a look at each week’s conclusion and see how accurate our predictions were.
Week of May 24 – “Bitcoin is currently bouncing off of the short-term trendline, and will retest the $10k levels. If this level is broken, I expect the price to increase significantly, as Network Hash and Mining Revenue are at support levels…. If BTC breaks $10k, it could easily rocket to $12k. If it fails and the trendline breaks, a return to $8k is likely.”
As you can see, we were correct! The price retraced, held the trend, and then retested the $10k levels. Accuracy: 1/1
Week of June 7: As we correctly predicted in our last analysis article, Bitcoin bounced off of the trendline and retested the 10k levels, which it failed to break. Since then, it has been trading in a narrow range, with a decision point coming in the next week. The $10k mark is a strong resistance, and if broken, BTC could easily test the $12k levels. If instead, BTC breaks downward, strong support will be found around $8.1k.
Since price indicators and investor sentiment are both neutral, trading in this time is at an increased risk. Be sure to use tight stop losses and not to trade more than you are willing to lose.
Let’s see how we did!
Our advice was to use extra caution, and we predicted that if Bitcoin did not break the $10k levels, it would retest support. Thankfully, the price did not go all the way to $8.1k, but it did in fact retrace to about $8800. We’ll give ourselves a half point here. Accuracy: 1.5/2
Week of June 14: Last week we predicted that if Bitcoin failed to hold above the $10k level, the trend line would be broken and the price would test support levels. That is exactly what happened, leading to the recent correction to $8800. The recent spike to ~$9400 could be a good shorting opportunity for traders with a higher risk tolerance, with a target entry of $9450 – $9550. Long term, Bitcoin remains bullish, but traders should exercise extra caution until a clear direction is confirmed.
Here’s what happened:
Our suggestion for risk takers to consider shorting around $9550 was a perfect entry (red box above) and would have been profitable if closed before the next week’s TA article was released.
Week of June 21: Since miners are not making as much money post-halving, a convincing and sustained break above the $10k level will be explosive. Nonetheless, the $10k mark has been an extremely strong resistance, and the price has failed to hold above this key level. Technical indicators as well as investor sentiment are all bullish, and I expect the price to retest the $10k levels in the coming days. Key support levels are: $9.2k, 8.8k. Key resistances are $9.6k, 9.8k, and 10.2k.
We read the market as bullish, and thought that Bitcoin would go up to challenge the $10k levels. We were right about the direction, but Bitcoin stalled out around the $9800 mark. We’ll give ourselves .75 of a point for this one.
Week of June 28: The $10k psychological resistance continues to evade Bitcoin, and the price is now consolidating yet again. After a failed attempt to break support last week, Bitcoin is in indecisive territory. On a short timeframe, technical indicators look neutral to bullish, but on the larger time frames, they look neutral to bearish. The best move now would be to wait for entries near the support zone, use tight stop losses, and exercise extra caution until Bitcoin determines a decisive direction.
Since the advice for this week was to avoid trading and wait for a clear change of direction, we are going to skip this week.
Week of July 5: Bitcoin continues to consolidate in an increasingly narrow range, indicating that a large move is getting closer. While many expected a “death spiral” to form after the block halving – the network hash is increasing. Bitcoin is showing its resiliency, and is currently undervalued. While sentiment and indicators are neutral or slightly bullish, Bitcoin’s fundamentals are strong. That being said, Bitcoin does not always perform as we expect it to. It’s the wild west. Be sure to use extra caution when taking your positions, and as always: NEVER INVEST MORE THAN YOU ARE WILLING TO LOSE.
Again, we are going to skip this week since no clear prediction was called. We did, however, predict that a “large move” would be coming once Bitcoin broke out of the consolidation zone.
Week of July 12: Bitcoin’s strong fundamentals tell me that once we break out of this consolidation zone, chances are it will be upward. This is not guaranteed, but a convincing break above the $9500 zone and then $10k with strong volumes will confirm the move. Otherwise, a break below $8600 and then $8k will confirm the opposite. Given Bitcoin’s low volatility, a break out of the consolidation zone could happen at any time. It’s important to exercise extra caution while trading until a direction is confirmed.
Unfortunately, the market did not move much in this week, and no call was made. On to the next week!
Week of July 19: Last week, we shared that Bitcoin’s “Hash Ribbon” indicator flashed its first “buy” signal in months. This signal was given on July 12.
Whenever this indicator has given a buy signal in the past, huge gains have followed in the weeks after. In 2017, it posted 93% returns in 122 days after the signal. In 2019, it made 277% in 166 days. In 2020, it made 45.3% in 48 days. What will it be now?
The week that we made this “bullish” indication is when the fireworks started to go off on the chart! Definitely was a good call that week.
Week of August 2: After taking a one week vacation, we were back this week with the following analysis:
Bitcoin has been responding predictably to the market indicators. After finding support levels above $9k in price, investor sentiment being slightly fearful, and the hash finding strong support, the only way Bitcoin could go was up. I expect that Bitcoin is out of gas for the moment, and will bounce around in the $10-12k range for a bit of time before making another move. Long term, I am very bullish on Bitcoin but a retrace to $10k is possible. If Bitcoin holds $10k, this is actually very bullish as it means that the strong resistance has turned to strong support.
We predicted a short term correction before long term gains. At the time of writing, Bitcoin was closer to the red box in the image above. It very quickly followed our prediction, and dropped to the green zone before rebounding.
Week of August 9: While the fundamentals and price analysis look Bullish, the investor sentiment is clearly bearish for the short-to medium term. That being said, the market could stay greedy for a few more days and push Bitcoin higher before the “greed bubble” bursts and the price corrects. Personally, I would be very hesitant to enter a long position until the index turns back to neutral. However in the long term, I see the markets as very bullish for Bitcoin and believe we are in the beginnings of a new bull cycle that could take us to all time highs. The future is bright for crypto. Happy trading.
Yesterday we said that in the short term, we were Neutral/Bearish, but still bullish in the long term. As you can see, today our prediction is playing out correctly, and Bitcoin is retracing its price.
Our goal was never to create buy and sell signals. Rather, the purpose of these TA articles was to determine overall market direction for both short and long term. If you have read these articles, you have enjoyed our highly accurate analysis, which was correct nearly 90% of the time. Hopefully you have seen the value of these articles reflected in your portfolio.
As always, do your own research!