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Home Technical analysis BTC

Bitcoin Uptrend From $20K Has Been Lost According To Parabolic Indicator

Tony Spilotro by Tony Spilotro
2 weeks ago
in BTC
Reading Time: 3min read
Bitcoin Uptrend From $20K Has Been Lost According To Parabolic Indicator

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Bitcoin price is still trading well above $30,000 after a nearly $5,000 retreat from highs set at the turn of the new year. But during the first decent-sized correction in the cryptocurrency since $20,000 was broken, one “parabolic” indicator could be suggesting that the daily uptrend has been lost.

Here’s a closer look at the Parabolic SAR indicator and what it currently says about the first-ever cryptocurrency and if its unstoppable rally will continue.

Bitcoin Daily Uptrend Possibly Finished For Now, According To Parabolic SAR

When Bitcoin touched down to $3,800 on Black Thursday, retesting its bear market bottom and confirming it as resistance turned support, it gave bullish investors all the confidence in the world that the cryptocurrency had staying power.

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If that frightening day didn’t shake out holders, then nothing would. Since then, BTC has been moving off of exchanges, and the digital gold narrative has taken over the world of finance.

Related Reading | Bitcoin Closes 2020 As Best Performing Asset Of The Last Decade

In addition to retail FOMO picking back up, institutions are now buying Bitcoin with everything they’ve got – suddenly interested in the asset to protect and store their vast wealth.

All that wealth pouring in before the price per BTC rises too high, has caused the cryptocurrency in just one year rise from $3,800 to just under $30,000 in 2020. The moment the New Year turned, the cryptocurrency added another nearly $5,000 in less than five days.

But as of last night, the asset’s deepest correction began, and it possibly ended Bitcoin’s uptrend on daily timeframes, according to the Parabolic SAR indicator.

bitcoin parabolic sar

The Parabolic SAR indicator has been hit on daily timeframes | Source: BTCUSD on TradingView.com

Not So Fast: Breakdown Of Daily Parabola Leaves High Timeframe Momentum In Tact

The Parabolic SAR (stop-and-reverse) indicator lives up to its name by potentially spotting when an asset’s parabola has stopped and reversed.

In the image above, the red wick on the nasty daily BTCUSD candle touched the SAR dot below the price action, causing a new SAR to appear above. When this happens, it typically suggests the trend is about to reverse.

The tool has been described as up to 80% accurate, and it is also helpful for traders seeking to employ a trailing stop loss strategy, where stop losses are moved higher and higher in profit just below each SAR dot. When the price action comes back down and stops out the trade, the trader is profitable and can rest assured they were stopped out at a point where the trend was ending anyway.

But like all indicators, their use doesn’t only apply to daily timeframes, and on weekly and monthly timeframes, the uptrend is at very little risk at current prices.

Related Reading | Analyst: Bitcoin Parabolic Trend Is “Close To A Breakdown”

On weekly timeframes, for the parabola to be violated, Bitcoin must pass below roughly $22,000. For the monthly uptrend to conclude, price action must retrace to as low as $6,100 before having to worry about another long-term bear phase.

With those numbers so low, it is difficult to imagine them being reached any time soon. And with high timeframe signals the most dominant, even a short-term retrace on daily timeframes, won’t damage the integrity of the greater bull market.

It is worth noting that the Parabolic SAR indicator rises as price does, so these figures will change depending on which way the cryptocurrency trends next.

To consider the daily uptrend to be resumed, Bitcoin will need to take out $34,750 and keep to keep trucking higher from there.

Featured image from Deposit Photos, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptoparabolaparabolic sarxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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