How far do Bitcoin Corrections go?
Bitcoin has been in a strong and steady bullish trend since September 2020 and like the entire financial chart of an asset, it does not rise in a straight line, it has its corrections.
The point is that in all this movement, we perceive a standard in these corrections and that means that there can be a consistency of operation with excellent points of purchase in those areas.
Graph by Tradingview
In this graph 3 exponential moving averages are plotted. Are they EMA21 (blue), EMA89 (black) and EMA200 (red). Let’s focus on the two biggest ones.
See that the graph shows since December / 20 and whenever the price stretches there is a correction. This correction comes back in standardized points that can be attributed to these moving averages.
Every time the price fell after a historic high, it stops either at EMA89 or EMA200 and comes back from there – except at one point in January that threatened to lose EMA200 and break down – which it did not.
But does this pattern always work?
Well, usually when we have a trend chart, it tends to work well. It is a strategy that I as a Trader use a lot and the interesting thing is that it works in various graphic times.
In the graphs above, we see in 5 minutes and in weekly and the pattern, somehow, is repeated.
We see that it works when the trend is also falling on the 5-minute chart on the left. the price corrects upwards in the averages. And in the weekly, even the fall of Coronaday in March was at EMA200.
As always, we reinforce that there is no rule in the financial market – it is not an exact science – but we love to identify a pattern and (for Traders) if this is in line with risk management and emotional management, there may be consistent gains in the market.
The deepest study on the subject is worth.