Gold Echo Bubble Resembles Bitcoins. Pattern Recognition FTW.

11 мар. 2020 г.

Notes before starting: both charts are on the arithmetic scale, not the log scale. Gold is on the monthly time frame and bitcoin, using the BLX ticker, is on the weekly.

Once again I am persevering over the charts looking for patterns that may repeat to by benefit and this is a pattern that dumbfounded me when I saw it on Bitcoin. I was amazing that calling the top was just as easy as what I had seen on the bottom chart with BLX. Support as shown by the magenta trendline became resistance in dramatic fashion.

I brought up the gold chart with today morning cup of coffee and that pattern recognition kicked in. Gold is in a echo bubble just as bitcoin was. I had been looking for the top of gold and was off when I was looking for divergences about $75-100 dollars go. And don't get me wrong, divergences are a great thing, but for me I am best when I do the charting first, and indicators second.

to put a fine point on it:

• Magenta trendline acts as support till a parabolic move
  
• Long term give back ends up with a reversal pattern. The Bump and Run for bitcoin, and the Ascending Triangle for Gold
  
• Price Action hits the magenta trendline as resistance
  
• Black trendline goes from the peak of the parabolic move to where price action and the magenta trendline interact (I adjusted the BLX line based off more data. Likely the gold black trend line will need some fine tuning as well.
  

If this pattern recognition is correct Gold should move to support at $1,480 and then after perhaps a bounce and consolidation to the acceding triangle support at $1,370. We may see one final monthly candle for April, hopefully one predicting reversal, and then we are off to the races.

Now this is primarily a gold post but there is the chance that some of the money divested in gold will land in the other fiat alternative, crypto or bitcoin specifically. Bitcoin, so far, seems to be setting a higher low from the one established at 7000 in late 2019. If that interest you my linked post may be interesting.

Now onto the second most important thing in my arsenal after charting price action: Volume Action. the chart below shows a similar volume situation for bitcoin's echo bubbles regection at $14,00 and the current potential echo bubble rejection in gold: Hidden bearish divergent volume to price action.


This is a hard post to read in a lot of ways. Gold is seen as the store of value and experienced precious metals investors know that gold and silver take hits when the stock market pulls back as people need to cover their shorts. But as my Great Depression Scenario post shows, if this is like the great depression precious metals are not just pulling back, they are falling out of the bottom of the trap door. Those implications are not good. Bitcoin? Flip a coin if this benefits from another round of Quantitative Easing like it has in the last several rounds. My bias is price action will appreciate as people turn fake Fed dollars into fake internet dollars but if $7,700 BTCUSD does't hold as support I am not holding bitcoin after that.

The everything bubble clearly seems to involve gold.