It’s been a long and dull year, but if technicals don’t change for the worse, we will be All Systems Go soon, a time when you ‘can’t go wrong… or get fucked…’ as long as you cash out. ;-)
Machiavelli wisely observed, "Whoever wishes to foresee the future must consult the past, for human events ever resemble those of preceding times." Across the internet, you'll find enthusiasts studying historical patterns to shed light on the path ahead. The echoes of past market behaviors, economic cycles, and investor sentiments often set the stage for the unfolding drama of the coming months, offering valuable insights.
This was a thesis for 2024 Q3:
“The environment suggests bullishness for the quarter… However, this trajectory heavily depends on where the market bottom ultimately forms… In the least favorable scenario, we might experience a significant – and potentially final – liquidation event, followed by a rally that brings us back into the trading range observed throughout Q2...”
This particular outcome was a good analysis, as the market made a new lower low for the year on a significant liquidation event and rallied back into the Q2 range.
In this report, we'll explore how the prologue of recent market activity might shape the quarter’s technical narrative.
The goal is to identify the market’s rhythmic up and down waves across various timeframes through algorithmic pattern analysis to construct model that represents the repetitive nature or cycles of the market. With an assumption that the patterns continue uninterrupted, they can provide insights into potential future market behavior and turning points.
There are a few common issues with this approach. A cycle direction is not always directly reflected in the price action on the chart. Also there are often many detectable patterns at once and it’s always speculation as to which ones are the patterns in play at any given time. This leads to the third issue, with each new day new information is generate which can dramatically change the outlook. To mitigate this issue I create a model at the beginning of each quarter with my expectations for the next 3 months and use technical analysis, day by day, to validate or invalidate this thesis.
Below, I’ll be reviewing 5 datasets that I believe in combination can create a comprehensive and accurate picture of the future in the crypto market.
Market Cap of 125 top cryptocurrencies.
https://www.tradingview.com/chart/PvuZm06h/
What’s on the chart:
By mid October the yellow, blue and red lines show a complete bullish alignment of the daily, weekly, and monthly cycles respectively. All show topping in this quarter.
What the chart means to me:
New positions in daily chart trading are viable when bullish signals appear at support levels or when price breaks out from resistances with consolidation underneath.