Point & Figure: The Chart That Makes Bitcoin Support Cut And Dry
08 Dicembre 2021 - 7:24PM
NEWSBTC
Is Bitcoin in trouble, potentially on the brink of collapsing to
unexpected new lows? That’s the question on all crypto inventor’s
minds, as the leading cryptocurrency by market cap tends to lead
the bullish charge. However, a somewhat forgotten style of
technical analysis could provide the most cut and dry look at the
current support levels – “important” support levels that are fully
in tact despite the bloodbath to start December. Let’s Get
Technical: The Origins Of Point & Figure Charting Before there
was TradingView and other computer software-based charting tools,
technical analysis was entirely drawn by hand. Traders would
wait for the bell to ring on the day before adding the daily close
to their charts. More than a hundred years before Bitcoin was
created, an anonymous writer by the name of “Hoyle” first wrote
about a different type of hand-drawn chart in 1898, called the
Point & Figure chart. His writings were featured in the book
The Game in Wall Street and How to Successfully Play It. Related
Reading | Finding Fibonacci: Is Bitcoin Beginning A “Golden”
Recovery? Point & Figure charts are a series of columns of Xs
and Os. Unlike the the book’s title and the comparison to
Tic-Tac-Toe, this type of chart is no “game.” It is designed to
filter out time and noise from price charts, and make levels of
support and resistance significantly easier to identify. It also
puts the focus on “important” price movements only. Which is why
the chart might make the confusing situation in Bitcoin a lot more
cut and dry. Xs and Os make up a Point & Figure chart |
Source: BTCUSD on TradingView.com Bitcoin Drops To Undeniable
Support Level That Bulls Must Hold The chart above might look
unusual compared to the Japanese candlesticks and bar charts most
traders share. Support can be drawn either at 90 degrees or at 45
degrees for an uptrend. Resistance also works similarly at 90 and
45 degrees. The current column of red bars represents the downward
price action, which first touched the blue horizontal support line,
pierced the 45 degree uptrend line, but has since bounced and is
currently holding above above it. Related Reading | Bitcoin
“Speculative Chart” Suggests Cryptocurrency To Soon Blast off Price
is also now holding at the red line, which could be a retest of
resistance turned support. An active buy signal still exists
stemming from the most recent higher high of Xs, and a new sell
signal won’t generate until two full circles below the blue line,
creating a lower low. The same chart, but with candlesticks instead
| Source: BTCUSD on TradingView.com According to a Wikipedia
entry, “45 degree lines may be used to define up trends and down
trends from important highs and lows on the chart allowing
objective analysis of trends.” Switching back to the traditional
candlestick chart that is normally shared here on NewsBTC, the same
horizontal support levels and 45-degree uptrend line remain. Using
the Point & Figure version is instantly more “objective,”
eliminating any possible personal bias from the picture. Related
Reading | Bitcoin Falls Flat: Examining A Rare Bull Market
Corrective Pattern Zoomed in further below, the Point & Figure
chart has potentially filtered out the wick to the low $40Ks,
highlighted an “important” retest of the 45-degree uptrend line –
which is currently holding – and could demonstrate a resistance to
support flip in action. Objectively, a decisive close of red
circles below the red line and below the uptrend line would make it
very clear that the bull phase is over, and more extended downside
is coming. Losing the 45-degree uptrend would be telling |
Source: BTCUSD on TradingView.com Completely "objective" technical
analysis is challenging no matter who you are or your experience
level. Point & Figure charts make it extremely clear that the
#Bitcoin uptrend is still intact. But still necessary to be
cautious. pic.twitter.com/oN3l8QI0ms — Tony "The Bull" Spilotro
(@tonyspilotroBTC) December 8, 2021 Follow @TonySpilotroBTC on
Twitter or join the TonyTradesBTC Telegram for exclusive daily
market insights and technical analysis education. Please note:
Content is educational and should not be considered
investment advice. Featured image from iStockPhoto, Charts from
TradingView.com
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