#069 - The Bullish Divergence You Can't Ignore (and what it means for you)

When in doubt, zoom out

Every so often, it’s easy to forget where we are going as we focus on all the waves surrounding the ship.

Today is my birthday, so I’ll keep this edition short and focus mostly on high timeframes.

That’s why we’re going to zoom out.

A Bullish Divergence has been spotted.

Quick Primer: A bullish divergence is an easy way to determine if the price of an asset is building up pressure to move in the opposite direction.

When the price goes down, but the indicator goes up (top right panel), it’s as if we were pushing a ball underwater.

At some point, it will shoot out of the water.

You don’t want to miss this explosive price action.

On the 3-day timeframe, there’s a bullish divergence—the top arrow points towards the price, and the bottom arrow points towards the VMC indicator. You can read about this indicator here.

What does it mean? Well, a break above the upper blue trend line would mean that we are going to print a higher high and, hopefully, the first higher low in the next month.

Altcoin Market Signals

As a reference, you can look at the May 2023 correction (green circle). You might not have had the best entry at each blue buy signal, but you'd be extremely profitable if you bought at each buy signal.

Here’s the ethbtc and altcoin market buy alert from the Onchain Edge Telegram bot.

If you want access, copy the referral link and share it with friends.

Access the Onchain Edge Index Alert Bot By referring 1 subscriber to the newsletter. 

Daily timeframe buy and sell alerts for BTC and ETH and other altcoins have been added.

The onchain edge index is now at 31.25 (very close to dropping below 30. That would be the first DCA buy signal in quite a while. Refer someone so you don’t miss it. It’s free)

Onchain Perspective

First, here’s the BTC halving chart I made right before the halving happened. You can read that edition here.

From the halving to the peak, we expect it to take around 420 days.

That’s a long time, and we can chop around, and nothing can happen.

Most importantly, you do not sabotage your success by falling into the FUD trap or using leverage.

Just SPOT and chill.

Under the surface, even though BTC hasn’t been moving that much, larger entities are accumulating.

That’s visible in the BTC inflows to accumulation addresses chart below.

This is not something we typically see when BTC has topped, but it happens before a large rally.

A lot more Bitcoin has started to flow into derivative markets. This means the IFP turned green again.

IFP is an indicator that tracks inflows into derivative markets. More traders are anticipating bullish price action, which is also often the case.

Bitcoin Monthly Close

Finally, let’s have a look at Bitcoin and the monthly close.

A candle close above $64.57k would be really good.

There are two things I don’t like about the monthly chart.

The first is the red sell signal on the July candle and the red dot on the VMC. Both indicate that the market is more overvalued than undervalued.

It does make sense since Bitcoin had a tremendous journey from $16k from the lows to $63k.

Remember that a red sell signal isn’t always the top; it’s the same as a blue buy signal. Furthermore, a green dot can still appear on the VMC.

For now, Bitcoin should try to recapture the $64k—$57k level, and then we will be good in the short term.

The blue lines at $40k present a potential price target should we face a longer corrective phase.

On the 3-Day timeframe things are looking a lot better for Bitcoin.

There’s a double bottom at $56k, and there’s a bullish divergence on the VMC.

Not much will happen unless we see a major breakout above either one of the blue trendlines.

Good reads from X

Learn from Srink on why you shouldn’t download and run programs from people you don’t know. Even if you know the person always proceed with caution as they might be hacked.

Altcoin speculation is at an all-time low. This means that a lot of retail has capitulated.

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