A Historical Analysis of BTC Price Action After Near-90º Arcs Drawn With 1H Candles
Disclaimer: My posts are slightly polished versions of my own notes, which I share in the hopes that other traders committed to self-improvement may gain some benefit. This post is educational and does not constitute financial advice.
“What does $BTC do for the three time cycles after a near-90º concave/convex up/down arc drawn using 1H candles?”
That’s the question I sought to answer this morning. Since arcs are central to my trading system, it is my duty to study them. Here’s what I discovered.
Near-90º 1H convex down arcs are bullish for the time cycle after break, and bearish for the next. It creates the liquidity required for frequent short squeezes near halfway due to the series of LHs, as well as for a massive dump, although the latter doesn’t happen often.
1H convex up arcs are bearish. Most cases failed to establish a HH within the two time cycles after break. Price usually ranges, but also tends to dump, especially if a strong downward movement occurred at the break. The data tells us to avoid longs, and potentially short.
Concave down arcs are bullish. Most cases failed to paint a LL within two time cycles. The largest subset initiated an upward trend, especially if a large pump occurred at break. The data says to avoid shorts and look for potential longs (only with confluence, as always). 4/9
Lastly, concave up arcs are bullish (and somewhat rare). In the largest subset of cases, the upward trend continues steadily. The data suggests to avoid shorts in this case, and potentially look for longs too if confluence exists.
Another interesting observation from this too. I expected the convex up chart to basically be a mirror of concave down chart, and similarly for convex down / concave up, since the arcs themselves are horizontally symmetric. But it turns out that while shorts tend to get squeezed in a convex down arc, there’s no evidence of longs getting squeezed in the opposite scenario (concave up arc). The market isn’t symmetric, after all. This implies TA is directional; TA will not necessarily perform equally well if the y axis is inverted.
Please note that the analysis in this thread applies only to very specific scenarios:
- Arcs drawn with 1H candles
- The difference between the slopes of the two ends of the arc is close to 90º
- CLEAN arcs. The slope between successive highs or lows must be strictly and clearly increasing or decreasing. See first pic in thread for an idea. If you have to stretch to make your arc not look like a straight line, then you’re doing it wrong. As a wise CT personality says, “Trading is like farting; if you have to force it, it’s probably shit.”
FIN.
