Technically Speaking – January 4, 2023

Today’s Litepaper is diving deep into the technicals. But don’t worry; there’s a TL;DR (Too Long; Didn’t Read) section if you want to skip the nerd stuffs. 

Let’s look at some prior Technically Speaking (T.S.) articles in the last half of 2022 that shine some light on what’s currently shaking for Bitcoin and the wider crypto market. 

August 22, 2022, and August 26, 2022

The August 22, 2022, T.S. focused on where Elliot Wave analysts were looking at $BTC.X to move next. 

Bullish and bearish cases were given. Below is an image of the chart highlighting the bearish case for Bitcoin moving into the $13,500 to $16,000 value area to complete Wave 5 if the $19,000 level fails to hold as support. 

BTCUSD Weekly Chart from August 22, 2022

The August 26, 2022, Litepaper again warned that a close below $19,900 could trigger another leg south.

However, instead of Elliot Wave analysis, attention was given to what Ichimoku traders and analysts saw as a time cycle catalyst to watch and an important Fibonacci retracement level as support. 

In a little over two months, Bitcoin would eventually fall into that value area described on August 22, 2022:

BTCUSD Weekly Chart January 4, 2023

September 2, 2022

Beginning on September 2, 2022, the T.S. articles in the Litepaper highlighted areas analysts identified as a possible bullish turning point for Bitcoin (and the broader crypto market). 

Analysts anticipated a corrective move for many reasons, including extreme lows in the RSI and the Composite Index oscillators on Bitcoin’s monthly chart.

BTCUSD Monthly Chart from September 2, 2022

Ultimately, the price action that occurred from September 2022 – December 2022 was a great cautionary warning against letting oscillators dictate the direction of anything – they are used to help confirm decisions, not create them. 

And despite hitting new all-time lows in the RSI in September, the RSI made new lows again in October, November, and December:

BTCUSD Monthly RSI and CI January 4, 2023

From a time cycle perspective, the September 2 Litepaper warned of an upcoming Kumo Twist between December 2022 and January 2023 in the Ichimoku Kinko Hyo system.

The TL;DR version of a Kumo Twist is a warning sign that a market may reverse/correct, especially if it’s been trending strongly into the Kumo Twist.

BTCUSD Monthly Chart – September 2, 2022

Moving to today, January 4, 2023, we can see Bitcoin has continued to trend lower right into the Kumo Twist:

BTCUSD Monthly Chart – January 4, 2022

These closing comments in the September 2 Litepaper highlight some important Ichimoku price levels for 2023. 

“In either scenario, 2023 will be critical for Bitcoin within the Ichimoku system. Because in order for Bitcoin to maintain a clear and strong bullish trend, it will need to remain above the monthly Cloud.

The bottom of the monthly Cloud for 2023 starts at $10,000 and then moves dramatically higher until it reaches $33,000 in June 2023 before slowly increasing towards the $34,400 level in December 2023.” – September 2, 2022, Litepaper.

From an Ichimoku perspective, Bitcoin is sitting in a position that makes me want to nerd out – the next three months are going to be exciting to watch.

Why? Because of Patel’s Two Clouds Theory (at least, that’s what I call it).

In Manesh Patel’s book, Trading with Ichimoku Cloud: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis, Patel calls attention to an Ichimoku phenomenon that no other modern Ichimoku analyst has called attention to in book form. This is what he observed:

When a major trend change occurs, the Future Cloud is thin, with both the current Senkou Span A and Senou Span B pointing in the direction of the Cloud.

It’s a rare condition that is currently present on Bitcoin’s monthly chart:

BTCUSD Monthly Chart – January 4, 2023

In combination with the big gaps between the candlesticks and the Tenkan-Sen (December 28, 2022, Litepaper), analysts still see a lot of upside potential for the crypto market. 

While there are some immensely powerful bullish warning signs, follow through by those bulls is necessary. 

Until the buyers step in, the path of least resistance is still lower.

Until it isn’t. 

Too Long; Didn’t Read

For da Bears: If Bitcoin fails to hold support in the $16,000 value area, analysts see the next near-term primary support zone in the $10,000 – $13,000 value areas.

For dem Bulls: Analysts see a combination of time cycles, monthly oscillator values, and Ichimoku analyses, suggesting that a strong bullish corrective move could be imminent. 

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