Why did Bitcoin jump to $21K? Rudo The Chart Artist on what's next!

Sa.

Foreign and welcome to Markets Talks. I'm Ray, head of markets at cointelegraph and here we're going to discuss what is shaping the markets with valuable insights from industry leaders, traders and influencers. Today's guest is Rudo Villagen. Rudo is part of a rare breed of traders who provide genuine, no fluff, no shill insights and into trading. And it's all from hard earned experience for him. He has over 60,000 followers on his Twitter and YouTube combined and he provides regular critical analysis on the crypto markets. How are you, Rudo?

Hi, Ray Gooding. You buddy.

All right, so I guess we should just jump right into it. What's going on in the market? Bitcoin, I believe yesterday did a nice little move where it moved up to 21,000 and now let's see where is it? It's gone down to about 20.5k. So I know some people thought that maybe trend had reversed, maybe the current range had broken and that we got that long awaited reversal in price that everyone's been waiting for. But then today is flashing different signals. So what's your take on what's happening today?

Well, it's kind of the, the technical analysis curse day today because it can go up or it can go down. We're going to have to take it by, by level. What I can see or say if we, I don't know if you've got my chart up or we can bring up a chart or so that we can actually show, but what I can say is let's quickly see there. We've got a chart. Awesome. Okay, so I'm gonna, I'm gonna just look at this from a, from a big picture, a macro perspective. If we look at bitcoin on the weekly, this was the play that we were running, the playbook that I was using to get these entries in at the bottom and why we were looking at getting. So if, you know, if you want to walk through and I can explain to you guys exactly how I got there. But now to answer the question where we at and, and, and what can happen? We're in a critical area because this is where I would want to hedge an additional short from all these highs, the previous highs and the reasoning behind it is, is what if I'm wrong? As a trader, it doesn't matter whether I call the bottom or call the top or call an entry for that matter. I want to make money. That's the idea. So I tend to come from a narrative that I don't care about my opinion of such, it's the bank balance. So every action I take or every trade I take is to cover my ass, if I could use that word in a sense to make sure that I'm in the correct move when it happens. So if we were to dive into a, you know, like a daily time frame to look at where Bitcoin is at, the. The idea is when we reach top areas of a lateral range, a range where price goes sideways, that's your cue as a trader to be bearish. Irrespective of macro trends or what the narrative might be on a, on Twitter or such, that's your cue to take bearish action. And when we're at the bottom, that's your cue to take a bullish action, regardless. Which means if you, if your trade fails, you sit in a situation where everybody gets to see you fail that one time. But that's okay because you would have hedged the short, somewhere along the line you will be carrying on the profit to a lower range. Now with that, with that in mind, when we look at these highs and we look at these lows, where would you take profit? If you're trading a lateral range smack in the middle. And that's where we are at the moment. So irrespective of, we can look at it as being the early makings of an accumulation pattern forming or where we are with any Elliott wave count of such. The reality is, is we in a space where profit is being taken. And when there's profit being taken, the market tends to act irrational. There's not a lot of structure on this because you're going to get a situation where people going to hit the sell button or get the short button going with acting out of an impulse rather than with a strategy.

So from a macro point of view, what's happening with Bitcoin price? Can you describe what the actual range, resistance and supports are? And you know, a lot of people don't actually day trade or even swing trade. We're looking for some sort of shift in the dominant trend in order to then enter a position, whether it be long or short. So I'm just curious from like the higher time frame point of view, what is happening? And was yesterday's price movement more of the same or is it some sort of new development that's showing, you know, the emergence of a new trend?

Okay, so from a macro point of view, I always like to start any analysis from a macro point of view. So for anybody that is new to this, make sure that when you start zoom out, go on the weekly to get context of where it is and what it is you're experiencing. And if we were to look at it from a macro point of view, obviously the picture looks bleak if you take it, you know, if you take the last bit, 10, 20, maybe 25 weeks into account. But as soon as we start bringing in a little bit more data, so I'm switching on all the all time highs and I just want to bring the perspective in. So if we zoom out and we start bringing in all the all time highs from the previous rallies, you can see that in, in relation to where the all time highs were. The, the next bottom is quite close to the previous all time high. As such now we are deviating from that ever so slightly. We have now passed the previous all time high or we're sitting on top of it and using it as a resistance. Now just to jump back. When we broke through the previous all time high, the narrative at that stage was very strong. Everybody was screaming and calling for it that we need to come back and test it somewhere. And now we are testing it and I find that the, the interest is obviously gone, which is as a trader and as an investor we can use to our benefit. But now let's bring in a few more dynamics because this is not, doesn't give you enough information as such. Now we know bitcoin goes through these halving sessions. So halving one happened, halving two, three. I've marked them out for you guys already on the chart so that we can save time now for anybody that is new. Basically the reward of bitcoin being mined each halving halves. So it becomes more expensive to obtain your bitcoin should you be mining. And that means that you should get in a supply shock at around a halving that normally creates this rally in price. So if we go back again and we look at the first halving, big rally. Halving happened, big rally. Halving happened, big rally. So if we are looking at that and we look at where the next halving is going to occur, we're sitting at around next year, 2024 in May. So we're quite a way off from that halving as such. But now bringing in an additional element to this ray and we look at the timing factor because although it is fine to talk about the next bull market, your question is, and the question that I think everybody's asking, when is the bottom or when can we start thinking or planning around this is the bottom. So what I've done over here and I'm just going to delete these levels. I've looked at a time fiber. Now basically, as we know that everything works in cycles and that's where fib levels came into fruition. So if we look at the previous start of Bitcoin to where the ultimate low was and to the halving and we try and find out when that were or when that occurred, we're looking at the 0618 or the golden ratio or the golden zone of time extension. And now if I take that and I bring that over onto our first to second halving to try and find a pattern, I want to see something repeat because as a trader we're looking for these repetitive events. If I expand my screen so that we only see halving to halving, you can see at between the two halvings at around the 618 extension of the cycle, the halving cycle, we end up bottoming out. If we move on to the next cycle from halving two to three and we bring that same time fib extension over and I'm just going to adjust it to the halving dates and I'm going to just make my screen nice and big for you guys. You can see that literally again, Once we cross the 618 extension, we start bottoming out. It doesn't mean that we create the ultimate low necessarily. But from an investor point of view or from a macro point of view, it's a good time to start dollar cost averaging. This is definitely the worst time to start dollar cost averaging, although at that stage it was a very big trending word. Now if we look at our current predicament of where we find ourselves, and I bring that over one last time and I'm putting it between halvings and halvings, we right at that area. So this sparks the question to myself, is this then the area where we should start dollar cost averaging? Now the trend from a, from an investor trading point of view, you treat the trend as your friend and as if it, as if it's going to last forever. So on this principle I'm looking at this and saying to myself, okay, I'm definitely interested in Bitcoin now. Now if I take this a little bit further and we talk about these accumulation patterns, which is normally what you would find at the bottom of a range after a big sell off or after a bear market structure as such, you can see that there's a few, you know, specific events that need to occur before we can even start thinking about an accumulation. And this is all the events in the phase A of a structure. So now if I flip back to my weekly, just to give you guys an idea of that, I'm looking at this, I'm drawing lines here, I'm looking at this and this was the narrative for the buy. And the reason why I was looking at the rally is that we have now created our climax. This is where the big selling pressure ran itself out. It got exhausted. And from that point onward we did have the automatic reaction or the automatic rally in an accumulation which if we have, if we were to put on the volume, you would see that the volume starts dissipating to the top so it ticks all the boxes. And then subsequently you want to now come back down and test this because in theory you've created a demand zone and this now needs to get tested. And if it holds, that's your secondary test and that can be seen as a sign of strength. Now what follows after you have your secondary test, you start moving up and you start creating your up thrust action. And that is where I'm playing out. So, so the thought is if I'm wrong, I want to short 2008 20,800. Excuse me, they short that because if this that I've laid out ends up failing and bitcoin just drops, I'm in with a nice big juicy short. I'll stop my long out and I'll be happy to, to ride the wave a little bit lower. But if I'm right, which I want to see, I want to see my short fail, I can expect bitcoin to start trying to attempt to these automatic, to the automatic rally levels of 25k to try and initiate the first higher high which will then sign the basis of we might have bottom out. Because now finally the bearish momentum has reached the point where we have done falling. We, we can expect if we go back down to 17k and we can even go a little bit lower. But we, we can start ruling out the possibilities of the 8, the 12, the 10, you know, any of those low ball calls that's out there.

So for this current range, what would you say is the most important resistance and underlying support level, price wise? And then is this a scenario where the current price action is simply setting up a bull trap?

Well, the most important level would be 20,800 because of the fact that if we look at this rally and if we look at the structure in greater detail, what we will find is any trading range. If we look at the previous year's trading range, I'll use this chart because it's already drawn up There just to save some time. So if we look at the previous ranges or the previous trading, what we will find is if I put my fib on and for anybody that's interested in this, the simplest, the easiest is just to use the half level, the 50%, you'll find that price will revolve around that and ultimately fail at around a 50% level. Meaning that there's a change of direction and a change of hand. Now if we take this and we start looking at where we at at the moment and we do the same exercise from, instead of a yearly range like I have over there, we look at it from the previous yearly range. You can see that we are bouncing on that level. So at this stage this is the most important range of support. So if you're looking at around 17, 900, 17,900, that would be the major support on the macro timeframe to consider. But diving into this on a smaller timeframe to try and gauge where we are and where we can hit resistance. If I use the same lateral range and I put the same fib on first range to the bottom of the range, the biggest resistance that we sitting at now is on this specific chart, 20,900 and and on other charts depends on them between 20,900 and 20,800. And as you can see currently this is where prices is kind of grinding to a halt. The momentum has reached an apex as such. So this would be the important level that I would want to keep an eye on, get above it and close convincingly a daily, or even a three day daily candle above that level. And we are definitely setting ourselves up for the potential of 25.

So, you know, moving into next year, what would be your price expectations for quarter one, quarter two, 20, 23?

It's a tough one to call because a lot can happen in the macro environment. You know, we are very reliant on the legacy markets at this stage to, you know, and they influence the market and the people's perception of the market. The market isn't, is an organic, you know, being as such and it feeds off emotions and spirits of the time, you know, the Zeiss Geist of the time. So if there's some bearish narrative that plays out or some bad news world bad news event that can impact Bitcoin for the good or for the bad. But if we were to talk price action or on this narrative, and the reason why I say this is purely because we know that any, any, any prediction as such needs to be addressed with a time limit and it's based on the information we have now. So as soon as there's any new big world event you need to go and relook your, your thesis. But looking at the targets for, for next year, I think quarter one we're looking at maybe 25, 29 max. And then quarter two we will probably be going back down to the 17s, even the 16s for that matter. As the accumulation range, the longer we fall between the 20, the high 20s and the high teens, that's going to be the best for bitcoin eventually because you need a long accumulation bitcoin price being stuck in a specific range in order to, when we have a breakout, in order for us to have a good momentum and a good absorption of supply so that price can actually move past the previous ranges. So that would be my best estimate. I will not be comfortable and I will not personally be planning on taking all time highs and trying to trade 70, 80k BTCs next year unless something magically happens.

Right. So in previous bull markets Bitcoin is not always like the first mover. Sometimes it's Litecoin that packs on a 150 to 200% rally, sometimes it's Doge, sometimes it's Ethereum either in its BTC pair or in a stablecoin pair that starts to move. So what are your thoughts on Ethereum's recent, you know, recent kind of performance post merge, whether it be in the USDT pair or in the BTC pair. And what type of non technical analysis drivers do you think could be backing Ethereum's kind of recent strength that we've seen?

Well, I think from, look my, my expertise lies with technical analysis as such. So I am, you know, I don't want to overstep any boundaries on, on, on the fundamental side of Ethereum. But Ethereum from a technical point of view is and as always will be the biggest leader most developers on it. You know from a, from, from a fundamental point it is poised for a big rally. It is, it's got all the necessary tick boxes ticked, you know and from a technical point of view, if I can bring up my screen I can quickly show you guys what we were looking at for Ethereum. And so if we look at Ethereum on the weekly, this was the narrative that we were looking at. So we were shorting yet again the top of the range. And the argument was if we find a bitcoin rally that is, that is, you know, like that played out like we, like we saw the basis was that what we will do is we will push back into this range and we could grab a buy back in that lateral range and trade it back to the half level. And that is exactly what we've done. So we took the trade from that, from that perspective, if we turn resistance levels into support, which you can clearly see price was to get back into this previous range. So if we turn a resistance level into a support, that is the trade setup that we, that we can utilize. So that is the best that I can do. And if you want to have a look at Ethereum, so to a BTC pairing, what I normally would do is just I would want to see whether Ethereum perform Bitcoin and or any other asset. So the best chart that I could use for this that I've got currently open would be this one over here. So what I do is if I try and look at where Bitcoin is at at the moment. So I've got the Bitcoin narrative. You can see the, the upper range sitting over there, the lower range over there. And this is Bitcoin screen. Then to the right top hand side I've got the total market cap, there's the upper range and that was the lower range created. And now I want to bring your attention to the half levels. And as you can see what happened in the total market cap, this is now Bitcoin and the alts combined, the total actually overperformed and actually drove through its half level already. Now the same for the total excluding Bitcoin, it's actually gone and drove through its half level. So it's showing me that if we have a continuation of a rally and Bitcoin starts to move back up to at least the 25 range percentage gain wise you may be looking at another 15, maybe another 20%. But for Ethereum the reality is that we might see bigger gains because of that. It's already showing us that there's more upside potential. So Ethereum might go and attack this, this the higher level in, in the alt market cap. So to go back to Ethereum for that, for that argument, looking at Ethereum on this basis, the argument is if we do get that prolonged rally, Ethereum can from this level on overshoot and go at least up 35% and only then will it complete the narrative or the basis that we need to for the beginning of an automatic, for an accumulation, meaning we had the low volume rally and now we are creating the supply zone which will inevitably be the trigger for the bull market, the next bull market, whenever that happens, when price breaks this again and that would be then somewhere at around 2200 as such. So that is the narrative that I have. So I believe that Ethereum can give us a little bit more and if we were to zoom out just to talk support resistance levels again what we can find is if you look at Ethereum in the past we had a lot of price action and a lot of price. I would, I would say a lot of price negotiation at around the 2500 level. So I would not want to see or I would not expect price to accelerate past that level. So any, any take profits or anything as such for me would be considered to be done below the 2500 Ethereum level.

Right, that makes sense. Regarding altcoins, what would you say are the kind of top three altcoins that you're looking at right now or that you're keeping an eye on?

Well, I've got a, I've got a list. I'm pretty biased when it comes to, to altcoins. I tend to look at the stuff I have rather than the, the ones that I did. But I've got a list of a few that I think can, can create headlines in the, in the not so near future if we do get Bitcoin to rally to 25k as such. So the first one will be Cardano. Cardano has been taking a big punishment and it's been accumulating for a hell of a long time. So if we do get that rally, my thoughts for Cardano is that we will be able to. Looking at where it's at, we probably get a 50% or even a 65% rally at that level, meaning that we initiated our lateral range from the $0.41 mark for Cardano. And I believe that if we can get the momentum and we can get above the half level for Cardano, which is still a big ask, it still needs to go above $0.50. It will open the door and it will create the run that we expect for Cardano to complete the cycle. I can be wrong and obviously if Ethereum decides to and Bitcoin decides to fail on this analysis and start selling off at this specific point where we at now at 20,800, the, the bias that around this has to be invalidated. So that's the, that's the big key for me on, on Cardano and then I was looking at. But funny enough I've got. When I look at BTT and I look at the, the, the way that the markets always move, the markets will always step down. So the previous lows will be the Highs on the retrace. The previous lows will be the highs on the retrace. So the previous lows will be the highs on the retrace. So what we did is we haven't yet got that highs. So to bring back the idea or the narrative, if we do get a good rally, I think a coin like bit has some good upside potential to at least go back above 80 cents and maybe make this $1 resistance or get close to this $1 resistance. Look, it's looking into the future and hoping. So take it with that same, you know, take it with a pinch of salt as such. Because first what we need to do is we need to get the bitcoin. We need to get bitcoin to start getting above 20,800. And then lastly, I think one that I do like is dot as well. Polka dot really, you know, set the crypto market alight when it launched. And I'm looking at this market and I'm looking at the last rally that we had and we had a significant push up and we basically engulfed in one daily candle all this consolidation and the shakeout event that we had. So we basically gotten above this area. And I'm, I'm excited about this because what it means for me is if we go back test some support level, if I use my 50% on the, the daily range high, a six dollar, that can be a potential really good buy. And then dot has the same upside potential. Once we get some momentum, these alts normally will have low interest and it can easily, with a little bit of money start getting manipulated back up to the range highs, which in that case can give you some good upside potential, speculatively speaking, but that is the case.

So usually when bitcoin price is constrained and kind of chopping along in a sideways ways range for a long time, altcoins capitalize on that and pack on gains. So do you see that happening across the market right now? Let's, because bitcoin's been in this range for 137 days. Right. So shouldn't we see some altcoins packing on steady gains as traders kind of look to trade, you know, altcoin, BTC pairs or just altcoins in general? Do you see that trend happening thus far? And if not, what are your thoughts on why it might not be happening?

Well, to, to answer your question from a, from a point, I always say if you can trade one asset well, it doesn't quite matter what it is. You've got your best friend named Leverage and he can basically Sort out any, any deficit that the moving coin might be short on. So from that point I tend to stick to, to trading aggressively bitcoin for that reason. But if we look at this chart that I've got open here, what I have is I've got bitcoin to the left hand side and then I've got the market cap dominance. This is the easiest and the most time effective way that we can do this. Now we can chart each coin to its BTC pairing into its Ethereum pairing. But the dominance is the, you know, it's like the early warning and the easy tell that we can see what's going to happen probably. So to the right, to the left is bitcoin, to the right is the dominance. And if we treat the dominance as if it was a coin and I'm looking at the range highs and I'm looking at the range lows, where is it? It's at the bottom end of the range lows. So when the dominance goes up, the market's favoring bitcoin in the sense that new money is either going to money or the market's selling off and money is staying in bitcoin and fleeing the alts. There's multiple scenarios for the dominance to go up, but that's the, that's the narrative. So if the dominance keeps, for, keeps its strength and I apply my same little 50% magic there, at least what we can expect is that some of these alts definitely because they have low liquidity and because they oversold and you know, the, the holiday investor has basically sold and left the building. So these coins have had an oversupply problem at this stage. I see that there can be some good upside. Specifically if bitcoin starts and continues its rally to the onside, Bitcoin will be the safer bet. But because there's low liquidity, I can see that some alternative. Even the micro cap alts, their time to shine will come as money moves from markets, from market structure or category to market category. Bitcoin moves first. It's done it, big money is there. Then everybody makes a little bit of profit. People want to risk the profit. They go to the, you know, the, the, the big caps and then they go to the mid caps and then if the market keeps on going, you know, the money will find its way to the micro caps and then you will see this insane gain. So it depends this still this has to be a slow grind up. I don't want to see this tomorrow. It needs to take at least a week or a few Weeks or a month or two to get us there and that's what we will need to get this dominance up and, and hopefully to get the dominance to. To fail and go back down. I've got my dominance all wrong now. Sorry man, I've been, it's been a long day. Looking. Nope. Looking at this. So looking at the dominance. Let's just quickly correct this before anybody we, we're sitting right on support. So in order for this to happen, let's just fix this. I apologize guys. In order for this to to happen we need bitcoin to have its consistent rally. But then at some stage we need the dominance to start moving back down. And if the dominance keeps on on this move your micro cap alts will not be moving as. So just, just correct that in rid of that guys.

Yeah, no, no, that makes perfect sense. So markets have been pretty boring know like predictably to the downside in your opinion are boring markets good or bad for traders?

Boring markets are easy for traders. So what you normally would find in a boring market is a lower liquidity which is bad for traders especially if you want to trade a high leverage position. But because you're going to be range bound your game plan is going to be simple. Buy the low, sell the highs within the range and you don't think about this moon take profit level and that's what trade is normally like. The thing is if we have this boring market, these lateral ranging markets, it doesn't really create excitement for new adoption to occur because most of us enter into the crypto, into the crypto space or buy our first crypto with the idea that we're going to be making a fortune and we might be quitting our job next year or next month and that's the drawdown. So I would want to see some excitement and that will inevitably be good for us as well.

Right. So basically what I'm picking up from you is possibly it is starting to look like a good time to dollar cost average into bitcoin. If we see price break from its current range and flip resistance. Current resistance on the macro level to support Ethereum price could possibly see an extended move to 2500 at which you are thinking about taking profits. 2200 traders should watch BTC dominance and if the dominance begins to drop then possibly there's going to be some like up moves from certain altcoins and that patience is key. Boring markets are good for traders.

Yes. And remember Bitcoin is the tide that rises all the ships. So it doesn't mean that Your, your smaller alts won't necessarily go up as well, but you're looking at a coin. And if you want to be trading a small altar and you're on a spot, you want to be trading it purely for the reason that it does make you more Bitcoin as well as more money. It seems that I've been there. You back there, you back, Roy.

Yeah, yeah, I see you. No, I heard what you said and I totally agree with what you're saying. Was there anything else you wanted to tell the trading world before we sign off?

As always, just keep hustling. You know, I don't think that there's any, any, any underlying truth, wisdom that we can say. You know, as a trader, from a trading perspective, we take each level as, as it is and we try not to form a bias. So we've looked at macro points, we've looked at where we are within the big picture, and it does look good. It looks like we've weathered the storm. But from, you know, as, as the trade in me says, just forget that I told you that. And we had a level where there's resistance, Treat the resistance as resistance, be part of the resistance when we there and be part of the support when we add support. Which means buy the bottoms when you're at the bottom and sell the tops when you at the top. You only have to be wrong once in each direction to be okay, you know, and, and then you, then you'll have a trend and then you can trade that. Right.

That makes perfect sense. Or Rudo, it's been a pleasure chatting with you audience. Thanks for attending. You can find Rudo at the chart artist on Twitter where he's basically charting and posting all day long. I know he's got a discord and a YouTube also. Thank you for coming on and we'll see everyone next Thursday. Sa.