Bitcoin vs Its Long Term Moving Averages by @the-rr-ratio on 3Speak
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Hello everyone, welcome to the RRR ratio where we focus on chart driven technical analysis. Today's video is about Bitcoin versus its long -term moving average. What do we have here? The green line, what you see here, is 200 week moving average. The orange one, is the 50-week moving average. How do you add moving averages? You can simply go to indicator, type in moving average, and then you have quite a good number of options where you can just add moving average. I have created moving average for myself. It's a custom one. But this one, what you see here is one of the moving averages built by the community on Trading View. The custom moving average, which I have, I have selected the first group, and within that first group, I have selected 50 simple moving average. 50 is the length, which it looks back. and the other one which I have selected is 200. Now, why do I have specifically these two numbers? The 50 moving average, 50-week moving average, is considered to identify whether a bear market or a bull market has been confirmed. When the price goes above. or crosses the 50-week moving average, most of the time traders consider it to be a bullish market for Bitcoin. And when the price crosses under the 50 -week moving average, it is basically confirmed that we are in a bare market territory right now. So, the situation right now is that we are in a bare market because the price crossed 50 week moving average on 10th of November in the week of 10th of November. And it has been under the 50 week moving average since then. We did not even see a rally back up to the level where it touches the 50 week moving average. the way we saw it in the previous years over here in 2018 it crossed here and then it ralled back up once and then in the year 2022 it crossed here and it ralled back up. It also had a close above the 50 -week moving average. the other moving average is 200 week moving average so 200 week moving average has been seen as a very strong support and it has proven to be strong support in two of the years so or let's say if we if we project this back considering Bitcoin was let's say had a much older price action than probably the 200 big moving average might have been somewhere here. So we have this one as a virtual support. In this cycle, price bounced back from 200 big moving average. Here as well, it priced. it took the price, the price took 200 big moving average as the support and continued to go further. And in all these three markets, when the price touched 200 week moving average, it was basically the bottom of that particular bear market. Now, during corona crash, we can see priced the price made kind of a V shape recovery but then this model of 200 week moving average being as a support for price during the bear market did not work out in the last bear market so what do I mean by that we saw price crossing below the 200 week moving average over here. It stayed below the 200 week moving average, and for quite some time, the bottom was not known whether it will be bouncing back or whether it will continue to go downwards. So the bottom was only, let's say, confirmed when price crossed. back about the 50 week moving average over here. So the idea of 200 week moving average is basically the bottom of the bear market did not hold true. And right now we are playing around on the 200 week moving average. So will it be the bottom? One cannot know, but given that this model has failed, the reliability of considering 200 week moving average as the bottom kind of goes down. We cannot rely on it. There were some observations that, all right, as we go further in cycles, so the first cycle, second, third, fourth, so on, we tend to mature and In that case, we have to also consider other moving averages. So here I would add, not 200, but 300 week moving average. And the 300 week moving average found, well, the price found kind of a support on this WIC in 2015, then it was very close to 300 300 week moving average in 2020 during the corona crash. Here, price crossed under 300 week moving average, but it bounced back after the accumulation phase, and now we are somewhere between 200 and 300 week moving average. So there is another narrative going that 300 week moving average might be the support because we did not have a euphoric all-time high. So that's why we would not have a catastrophic all-time low. Well, not all-time low, but this cycles bear market low. What I want to add further here is let's see if our chart can. create a 400 week moving average. So here I will switch on group 2 and the 400 week moving average, perhaps it's not there. 400, let's make it blue. Oh, that is the day. We want week. And right, we have it. So it was just putting the right settings before when it didn't show up. I had the time frame here as the day. And now I set it to week. So we have the close, we have simple moving average, and 400 weeks. So it has never been in the history. of Bitcoin that price has reached to 400 week moving average. We have seen it cross under 300. But so far, 400 has never been in discussion. But given how price is going down right now and how much time is left for the bear market, there is a pretty good chance that we might see something like this where price comes in between the range of 300 week moving average and 400 with moving average over here. Now if something like this happens, we might see price somewhere in this block. The price might go up, come back, go down, stay there perhaps touch 400 moving average and then start its next bull cycle another point where it seems that price might touch to 400 week moving average is because of the order block here This particular price, the price range, the candle, basically started this rally. And usually, when such order blocks are formed, sometime in the future, price tends to mitigate this order block. price at some point, either tomorrow, day after, or in the coming months might come back, just have a wick, and then bounce back, and then go. So if the price comes to this point, we might be very close to the 400 week moving average. Now, we have discussed in the past videos, on how we break down our Bitcoin price action, and that is in the accumulation and distribution phases. So, the accumulation phase starts after price has crossed the accumulation line. We are right now in the distribution phase. That is the bear market. So when price crosses the distribution line, it is considered. that we are in the distribution phase and prices can go down basically all the time. We can see a pullback, but most of the time the trend is downwards. Now, if I merge, if I try to find confidence of moving averages with the accumulation line, price has still quite some time. to go. Well, not a lot of time, but still, two to three months before it crosses. So the cross would be in the week of September. We are in July. So we have August, September, and let's say, the rest of July. So approximately three months. And after prices crossed this line, we usually see a drop. That's when the bottom happens. or very close to that so here we saw bitcoin crossing the accumulation line and we see our drop and then the bottom happens there is accumulation phase and we see the next rally now we might see something like that it might stay at 3rd week moving average see a drop some weak and then sideways and then the next bull run begins so moving averages are pretty good tool to see where the trend is going especially the 50 week moving average it basically helps us to confirm whether we are in a bear market or a bull market and the long-term moving averages which are 200, 300 and 400 week moving averages, I would always use them in confluence with the accumulation and the distribution line model because imagine if we would not use them in confluence with the accumulation and distribution line. Here one might think that 200-week moving average has worked out well, then it will never go under 200 -week moving average because over here, once it crossed it, it never went back. But then during corona crash, we saw price going under 200-week moving average. It even closed under 200-week moving average. Let's say this was one event, a Black Swan event, right? But if we use the same idea that price will not go under 200 week moving average, in the bear market of 2022, price closed under 200 week. It stayed under 200 week for quite a good number of weeks. And then it went under 300 week moving average. So what is to say that it might not happen? I mean, it has already happened. Price has closed under 200 week. So it can stay under 200-week, it can even cross 300-week moving average, and then it can stay sideways, and then when it crosses the accumulation line, we see a drop of 10%, 15%, 20%, it doesn't matter. And it might find support at 40-week moving average, and then it will start running back up. I think it... This would be all for today's video on the RR ratio. If you like the content, then do hit the subscribe button and I will see you in the next one. Bye bye.