Bitcoin chart analysis against patterns of other assets highlights future possibilities, not conclusions

  • 01 July 2019, Monday, 12:00

Chart and pattern Analysis is a major part of analysing and predicting traditional stock, commodities and cryptocurrency trading in the financial market. The price and valuation of these assets over time and different market trends are often used to gauge several metrics and predict future trends, market volatility, price direction etc.

Pattern analysis is a fundamental part of trading and it is widely accepted that these patterns often repeat themselves over time, forming shapes and to predict trends based on past behavior. The analogue or repetitive concept of pattern is the bedrock of chart analysis.

In being consistent with the same line of thought, a pattern comparison was drawn between Nasdaq 100 in 1999-2000 and the current pattern on Bitcoin’s charts.

As can be observed from the aforementioned charts, Nasdaq 100 of 1999-2000 and Bitcoin at press time, were indicating a somewhat identical trend. According to the exhibited pattern, Bitcoin will not breach the $12,444 valuation in the coming weeks as a breach mean a possible violation of the analogue concept, when compared to Nasdaq 100.

However, Peter Brandt, disagreed emphatically, claiming that it was not ideal to draw conclusions from patterns that project the same pattern.

Brandt clarified that chart analysis of virtual assets against patterns of other assets only represent certain possibilities of trend and not probabilities or conclusion. Pattern similarities between assets only projected situations which could take place, but it did not project conclusions on future trends, he added.

The community concurred with the explanation and twitter user, @Arthur_Sav, opined,

“One thing I’ve learned about BTC is that it moves in patterns we haven’t seen before. Best strategy so far is to HODL and hope for the best.”

Another Twitter user, @Haejin_Crypto, put forward a different reason and stated,

“I’ve found that fractals [analogs] are more accurate when in same degree of trend within the same coin or equity or index. When using an analog in hourly to another in weekly time frame; not best. Also, not ideal when trying to use Apple Inc’s analog to one on BTC.”