Short Term Update: Volatility is back

The volatility is back, to be honest I had suspected two days ago that Bitcoin was running out of fuel, even some profit taking evident on the hourly chart had let me think so and then yesterday that volatility peak was the confirmation.
Despite this, at a careful and lucid analysis, the situation on the daily chart has not changed, we are still in trend mode and it is not guaranteed that Bitcoin will go sideways in the next days.
In any case, pay particular attention to the support zone between 39 and 44 thousand dollars, it is very important to stay above 39 thousand dollars in order not to compromise the ongoing bullish trend.

BTCUSD Daily Chart – Kama average and deviation bands | Kama efficiency ratio

The most keen observers will have noticed that after a prolonged bullish trend, the kama efficiency ratio had reached 0.71, which is beginning to be an important value. Personally I see the correction of these two days as absolutely normal and also necessary in order to continue.
I would also add that this market did not go down because of Janet Yellen’s statements, news are always a consequence of market forces and never the cause. I explained in the past, for those who have been following me for some time on the blog, that when a bearish phase starts, the negative news will be amplified and the positive ones ignored, vice versa when a bullish phase starts, the negative news will be ignored and the positive ones will be amplified, but it is never the news in itself that moves the market.

Short Term Update: Back to “Trend Mode”

I waited a while before updating you about the short term situation because i wanted to see if the trend confirmed by the Kama efficiency rate was good and not a false signal.

BTCUSD – Daily Chart View

As I have said many times in the past, when the Kama average is flat there are very good resistance and support zones that define the useful space in which an asset, in this case bitcoin, moves.
Outside of these resistance zones a trend reversal is confirmed (if we break the support zone) or the continuation of the bullish trend (if we break the resistance zone).
What has happened is that bitcoin has broken the resistance zone positioned at 40-44 thousand dollars thus confirming the bullish trend. On the weekly chart the trend is strong and price remains consistently above the weekly Kama average.
Kama efficiency ratio is now in “Trend Mode” on all the main timeframes: Daily, Weekly, Monthly; therefore my outlook is strongly bullish.

Short Term Update: Approaching Resistance Area

The situation has not changed much since the last update, BTCUSD retested the support zone a second time and reacted to the upside.
Now we are entering the resistance zone and the kama efficiency ratio is still below 0.30, flat market.
I would say that I’ll expect some form of resistance between 40 and 44k from sellers in general.
A decisive break above $44k would confirm the continuation of the ongoing bullish trend on the monthly chart.

BTCUSD Daily Chart – Kama average and bands + Kama Efficiency Ratio

A particular attention deserves the situation on the weekly chart, where instead of going down BTCUSD remained flat for 4 weeks, I would interpret this behavior as a signal of strength.
Honestly, looking at the weekly chart, I already see 53-54 thousand dollars as a target for the coming weeks.

OFFTOPIC: A nice example of how to spot a top with Kama Efficiency Ratio

GME Daily Chart – Kama and Kama ER

I wanted to include this example because I think it is very good to understand the potential of the Kama average togheter with deviation bands and its efficiency rate (ER).
Last 28 January after a very volatile day and given the reading of over 0.80 of the kama ER I understood that something was wrong and that the top could have been done. This was confirmed in the following days.
A violent downward movement immediately brings the average kama in a stalemate position that allows us to have reliable deviation bands support/resistance zone.
I expected a correction down to 60 usd, which then happened. It is also not correct to say that the price collapsed from $480 to $60, it just moved within a very wide flat zone.
Now the GME price might even go back up to the Kama average.