November 5, 2024
Price Action Like This Can Show the Start of the Bull Run
Dear Subscriber,
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| By Bruce Ng |
Today is the big day.
This is the pivotal day my colleague Juan Villaverde’s Crypto Timing Model has identified as a key cycle low.
I still expect to see volatility in the markets over the coming weeks. But a confirmed low means we’re getting closer to the big, bull market rally.
Over the past several weeks, I’ve revealed three other indicators I use to determine when the rally will start. They are …
- Bitcoin’s Spot CVD
- Impulsive price action, and
- Coinbase perp premium
Now, I want to make sure you can track these indicators on your own. That way, you’ll have everything you need to know when it’s “go” time … right at your fingertips!
Last week, I walked you through how to set up the spot CVD indicator. Today, it’s time to teach you how to identify impulsive price action.
Chart Impulsive Price Action to Spot the Rally
Before we dive in, I want to quickly recap what impulsive price action looks like.
You can review all the details of impulsive price action here. But typically, impulsive waves have a five-wave structure.
Drawing these waves can be more of an art than a science. There’s a lot of subjectivity involved as to when waves start and end. Hence why I avoid relying on only one market indicator. And why I suggest you keep up with all three of my favorites.
Still, this is a powerful metric to mind. So, consider the example from the Bitcoin chart below:
This is the current one-day Bitcoin chart from TradingView. I’ll show you how to set this up in just a moment.
But first, notice the blue box. You can see that the rise from $52,000 in early September through to $73,000 just last week can be considered impulsive. That’s because it has a five-wave structure with two increasing higher high to higher low pairs — points one and two, then points three and four.
The black box is an example of corrective price action. It features a three-wave pattern and it tends to proceed and follow an impulsive pattern. (More on those later!)
Now, it’s your turn to chart this for yourself.
We will use TradingView as our main charting tool. Just head here and you will be presented with the following screen:
Go ahead and click on the search icon — the magnifying glass — in the upper left corner, marked by the yellow 1.
Now, search for Bitcoin (BTC, “A”). As you can see below, there are a variety of markets you can use to track Bitcoin’s price:
I typically use BTC/USDT on Binance, so that is what I’ll stick with for this example.
Type in “BTCUSDT” in the search box. Then, click on the BTCUSDT option from Binance, outlined in red above.
Now, your chart should look like this:
The next step is to make sure you’re on the right time frame.
You can see that the chart title says it is the “1D” chart. That means each candle — the red and green vertical lines — represents the price range of one day of trading.
That’s what we want for this example.
But if we switch the time frame, we can adjust the window of time each candle represents. This is a basic but important feature to learn. That’s because a thorough review typically occurs on multiple time frames.
For example, to evaluate:
- Low time frames (LTF): Use 15-minute or one-hour time frames. These typically allow you to assess charts over a period of one to two weeks.
- High time frames (HTF): Use the four-hour, one-day or one-week time frames. These allow you to assess charts over a period of one to three months.
As you get more comfortable, I encourage you to play around with these time frames. After all, and impulsive price action pattern is more likely to show on a smaller time frame first. If it can then cross into a longer time frame, the chances are better that we could be moving into rally mode.
For now, though, let’s keep it simple.
If your TradingView chart doesn’t show “1D” in the chart title, then you’ll need to switch time frames. To do that, click on the D button on the top left of the chart, marked by the yellow 1 above.
You should now see the following pop-up menu with a variety of time frames:
Now, select the 1D time frame on your chart and you should see the screen below:
Now that we’re tracking the right asset on the right time frame, we can get started.
On the leftmost panel is a list of drawing tools. We will need the Elliot Wave tool.
There’s a lot of technical mumbo-jumbo behind this financial theory. But in short, Elliot Waves are recurrent long-term price patterns related to persistent changes in investor sentiment and psychology.
If you’re interested in learning more about the theory, I encourage you to read this article from Investopedia.
But for our purposes, all you need to know is this helpful tool will be what you use to track impulsive price patterns.
To use it, click on the X-shaped line on your lefthand toolbar, marked by the yellow 1 above.
Once you’ve done that, you should see this pop-up menu:
Select Elliot Impulsive Wave (12345) from that list, marked again by the yellow 1. Now, all you have to do is identify the lowest recent low. Click on it, then click on each subsequent high and low point from there to chart them.
Now, your chart should look like this:
Just like the blue box in my initial example!
Sure enough, over the past two weeks — the time encompassed by this pattern — BTC rose to scrape against its previous all-time high.
Now, look to the right of point 5, and you can see BTC’s price is correcting slightly.
That is to be expected! After all, the impulsive pattern is now complete. The next logical step is a correction.
And we can chart that, too.
It’s called a corrective price pattern. It’s marked on the chart by a three-wave pattern and typically proceeds and follows impulsive price action.
To track it — and get a heads up when the next impulsive pattern may start —just select the Elliot Wave Tool (ABC) option after clicking the Elliot Wave icon on your left side toolbar.
One Last Note
As I mentioned earlier, charting impulsive price action is a subjective art. There are many ways to draw waves, which can make it an ambiguous indicator.
That’s why it needs to be used in tandem with other indicators if you want a clearer picture of when to expect a rally.
Bitcoin’s spot CVD and the Coinbase premium are great examples. And I encourage you to use them.
But if you’re looking for more hands-on guidance, I encourage you to watch Juan’s latest briefing where he breaks down his favorite indicator: his proprietary Crypto Timing Model.
It has accurately called the start of the past three crypto bull cycles. And now, it has signaled that a Golden Window for crypto is about to open.
The briefing is free to watch. Just click here to learn more.
Then, get ready for crypto’s Golden Window.
Best,
Dr. Bruce Ng
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