Bitcoin Intra Cycle Valuation

This indicator tracks Bitcoin's position within market cycles by measuring the deviation from trend. It helps identify potential overbought and oversold conditions in the market.

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How It Works

Intra Cycle Score

  • Measurement: The score represents how far Bitcoin's price is from its longer-term trend.
  • Interpretation: Positive values indicate potential overbought conditions, while negative values suggest oversold conditions.
  • Moving Average: A 7-day moving average is applied to smooth out short-term fluctuations and provide a clearer signal.

Signal Thresholds

  • Overbought: When the Intra Cycle Score rises above 0.25, indicating potential market excess.
  • Oversold: When the Intra Cycle Score falls below -0.25, suggesting potential undervaluation.
  • Neutral: When the score is between the overbought and oversold thresholds, suggesting a balanced market.

Visual Indicators

  • Red Zones: Highlight periods where the market is considered overbought.
  • Green Zones: Highlight periods where the market is considered oversold.
  • Log Scale: Bitcoin price is displayed on a logarithmic scale to better visualize percentage changes.

Interpretation

This indicator is most effective when used as part of a broader market analysis strategy:

  • Overbought Signals: Consider reducing exposure or taking profits when the market shows strong overbought conditions.
  • Oversold Signals: May present potential buying opportunities, especially during broader bull markets.
  • Persistence: The longer the market remains in overbought or oversold territory, the more significant the potential reversal.
  • Confluence: For best results, use in combination with other indicators and fundamental analysis.

Historical analysis shows that the Intra Cycle indicator has effectively identified major market tops and bottoms, though like all indicators, it's not a perfect timing tool. It works best as one component of a comprehensive trading or investment strategy.