$BTC 2020-SEP-25
BTC CHANNEL CORRELATION DROPS BELOW 90%
When an assets price spends so much time above its average, it can be really concerning when price drops below the average. BUT. Every trend needs a period of time where the price is below it - that's have averages work. It's much better to consider zones or ranges of acceptability rather than a fixed point in time. The channel we are watching for BTC is +/- 2 deviations from the average of the log chart.
If we overlay our signalling indicator on top of the chart, the top of the green cloud is -2 deviations. Interestingly, we can see that as this trend has developed it has consistently respected the lower bound of -2 deviations.
With the correlation (how well 2 variables fit each others trend) dropping below 90%, we need to look for further signs that this trend is in the process of breaking down. Until that happens though, the assumption is that we will again see a recovery off this lower bound and, ideally, return to the upper half of the channel.
When an assets price spends so much time above its average, it can be really concerning when price drops below the average. BUT. Every trend needs a period of time where the price is below it - that's have averages work. It's much better to consider zones or ranges of acceptability rather than a fixed point in time. The channel we are watching for BTC is +/- 2 deviations from the average of the log chart.
If we overlay our signalling indicator on top of the chart, the top of the green cloud is -2 deviations. Interestingly, we can see that as this trend has developed it has consistently respected the lower bound of -2 deviations.
With the correlation (how well 2 variables fit each others trend) dropping below 90%, we need to look for further signs that this trend is in the process of breaking down. Until that happens though, the assumption is that we will again see a recovery off this lower bound and, ideally, return to the upper half of the channel.
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