This one chart is all you need

Trading is not investing and vice versa. However, both can help the other. When I see a big fat trading signal for a stock, I go and look at that stock and see if it makes a good investment.

The problem with proven trading signals is that you better be your own or they won’t work because old ones tend to get traded away. The only time they can be obvious is when the market is so messed up that it is no longer efficient and clear signals are not traded away because everyone is in trauma. If the signals are your own secret sauce, the difficulty is the same, they just don’t come as often.

So you can have a huge selection of tools and none of them are of any use at the moment, so you sit like a crocodile on the muddy shore waiting for an opportunity to float by. It should be a relaxing strategy, but let’s face it, if you’re not a market junkie, you wouldn’t be involved at all, so the agonizing wait is painful.

The current markets are in such a situation. Is this bitcoin’s Wile E Coyote when the main character has already run off the cliff and it just steps in the air before a horrible fall, or the $20,000 bottom?

This is the chart signal example you need to look back from 2018:

This was four years ago, and four years is about a half-cycle lately.

So here we are now:

As I write, bitcoin is taking a dive, and normally these compression events are bearish. However, only about 80% of the time. The point is when volatility breaks out again, the direction will be set for a big move. You should not be greedy and try to catch it early, but when it is clearly in new territory it will continue for a longer period and this is what a trader catches.

I continue to think it’s down towards $10,000. As an investor, this makes me consider it a buy around $10,000. So this trade signal alerts me to be ready to enter a bottom and average in there.

Will $10,000 be a rock bottom? It depends on the Federal Reserve and this madness of the war between Ukraine and Russia.

This trading signal also alerts me to the danger of buying $20,000 as bitcoin’s bottom.

Will it do W instead?

In a way, I hope not, because right now it would just be something hellish that would lead to that.

Instead, I am optimistic that another move down will be the bottom and when we get there it will be about a sensible way to build a nice position for the next halving.