In this episode of NewsBTC’s daily technical analysis videos, we examine a possible breakout of Bitcoin price on linear scale. The logarithmic and linear breakouts are also compared to help determine if this signal could be reliable.
Have a look below at the video.
VIDEO: Bitcoin Price Analysis (BTCUSD), October 6, 2022
Is This The Bitcoin Breakout We’ve Been Waiting For?
Bitcoin prices have broken free from a crucial downtrend line in linear scale. This downtrend line links the $68K peak, $48K March top, and several rejections. Bitcoin has moved outside this trend line in the shortest timeframes.
BTCUSD can be charted best on a logarithmic scale before the bulls get excited. The trend line becomes obsolete when the log scale is used immediately. A downtrend is less severe when the trend line moves across the same points of the market.
Source: BTCUSD at TradingView.com| Source: BTCUSD on TradingView.com
BTCUSD Momentum Comparation Using LMACD and MACD
You can also use the MACD standard tool to create a linear scale chart. You can also use the logarithm version to make more precise comparisons between momentum over longer time periods. Using the regular MACD to compare past price action isn’t practical.
Also, the LMACD tends to give more reliable signals. The MACD has been bullish for Bitcoin long before the LMACD confirms it. This is evident in this example.
What The Log Scale Does Not Show: Several Weeks of Crypto Winter
Historical view showing the differences between log and linear scale charts over the BTCUSD price movement. Everything prior to 2017 looks flat on the linear chart. However, there have been price swings up and down of thousands of percentages many times. However, the breakout is there again.
It is difficult to compare the exact same type breakouts in past bear market. BTC broke through several downtrend resistance lines in 2018 only to form new ones. BTC was able to break out of the downtrend and later tested the resistance line, which became support.
The log scale’s diagonal downtrend lines show that they are far more reliable. Log downtrend lines on linear scale indicate that Bitcoin still has some way to go before breaking out of the crypto winter.
