After analyzing this pair, I discovered price appears to be moving in patterns. Price seems to have an up move, support on a moving average, have a corrective structure right at cycle target, and then have a new rally, exceeding the previous cycle by 2000.
Using this logic, I was able to predict and plot the next move up on the chart. I have calculated each cycles move by measuring the amount of points moved up after the corrective structure. After I found there was an cycle + 2000 expansion move after each corrective structure at cycle expiry, I was then able to replicate a cycle + 2000 points to see the future direction of the instrument.
I have broken down each point of my analysis below, and explained it in full detail below.
Each new cycle is the sum of the previous cycle + 2000 = new cycle.
Price has been in a long term uptrend. Price like all up trends has been having the basic principles of any uptrend: Impulse leg; a corrective leg; and a new impulse leg. When analyzing these is when I discovered price is moving in cycles.
The rule of the cycles is that XBT/EUR has an up move, then a corrective structure, and then a move which is the measurement of the previous cycle + 2000. Each time there is a move which is "X cycle + 2000", a new cycle is formed.
Using the above logic, cycle #3 is now formed.
There are some points about this analysis that I have provided below to increase your understanding of my analysis.
- Price supports on the 50 moving average for the first 2 cycles and relies on the 20 moving average for the third: This indicates that XBT/EUR is having it's final leg, and using the lowest moving average as support. After this the rally to upside will expire.
- Price has corrective structure before easy new cycle begins: If you analyze my chart, you will see price has a corrective structure (Of a similar measure size to previous cycle corrective structures) before the new cycle begins. If you analyze my chart, you will see I have outlined corrective structure on my chart for each cycle, and we are clearly at the final corrective structure for Cycle #3 to begin.
- Lack of over expansion: Now, for most traders, this will be hard to swallow and accept. The uptrend is NOT overextended at all!!. Despite price moving so much (1000's of percents) the price is still following the rules of a perfectly normal uptrend!. Due to price supporting on the 50 moving average for first 2 cycles then the third cycle is the 20, it shows the up trend has healthily expanded, and is now using it's final wave (The smallest sustainable moving average) to support price. The support on the 20 would tell me that price is on the last leg of the the trend cycle which is euphoria. When euphoric buying takes place, there will be a very extended up move! This move will be a very steep buying area and will hit target quickly. As soon as cycle #3 completes, the up trend literally expires and then price is free to roam as it wants to. (I would predict huge downside correction)
Bare in mind we need to see price stay at the higher levels for this to even be an active trade. Watch this chart very carefully before considering a position.
I will be updating this analysis as it progresses.
Price corrected to the downside today. The correction exceeded where I predicted Cycle #2 to end.
When I saw that price had exceeded the level I expected the up move, I decided to analyze the chart on a smaller time frame to see if it was too late to get the up move.
When reviewing the 1H chart, we can see that price did indeed exceed the cycle beginning level (End of cycle#2) but for exceptional reason.
On the hourly chart, price supported on the major moving average. I am expecting this to be a major support (at least for the short term) and from here I expect to see price go to daily levels.
If the up move and my above analysis come back into action, I would not want to see price go below the lows again at 10690. If it goes below this level, I will reconsider my analysis.
All the best
I'm pretty sure if I told you 3 weeks ago that price would go from 11k-16k in BTC you would have said something similar to your above comment. :S