Bitcoin Risk Assessment
October 26, 2021
October 26, 2021
The Power of the Technical Event Model™ (TEM)
The idea of a precondition aka set up – is for the context of the market to tell you in the simplest of explanations, “if you should trade the trend following signals or trade the reversals of the high to low range.” Sure the analyst can have a bias for a market’s direction, but the essence of TEM is dynamics timing, not direction. Its power is also based in the data it uses allowing it to measure risk and opportunity in any time frame.
In Forbes TEM was presented this way regarding Bitcoin,
Charles Bovaird Forbes Senior Contributor
The world’s most prominent digital currency may experience sharp volatility over the next few months, according to a proprietary model created by technical analyst Jack F. Cahn.
Technical Event Model (TEM), which he developed in-house and measures extremes in sentiment, is a price-based macro filter that helps algorithmic trading programs predict when market dynamics are about to change and what to expect.
The model, which was designed to be direction-neutral, indicates whether the market is about to break into a new trend or has entered a period of panic buying or selling.
Recently, Cahn wrote that the TEM “suggests a range expansion in October/November.”
More specifically, the technical analyst indicated that his model “is suggesting a monthly range expansion of 20k for Oct and or Nov.”
It might take place “from the open of the month to the close of the month, maybe faster, but the risk is 20k,” Cahn added.
The bold italics are my highlighting of his interview, which allows me to point out TEM’s power. Thus far the BTC has a range of near 20k and may challenge the previous long bar of 30k. However, the risk remains a bear market back to 13k at least. So long-term investors need to do their risk analysis here as BTC succeeds or fails to hold new highs and move higher.
As the premier risk taker’s market, Contrary Thinker’s sees its background as weak per the above. Hence, it will not take much to change in the market’s direction for new money to flip out of the BTC. Since Profund’s ETF came to the NYSE on the 18th of October, the market’s advance stopped on the 20th and gave back 8k. Not overtly bearish but soft nonetheless.
Volatility Reports predication of a “monthly range expansion of 20k for Oct and or Nov” was on the money. Thus far the range is at 23,500 after hitting its next measured move level as seen in the left-hand monthly chart.
For BTC ($BRTI) to continue its monthly high/low range expansion, the market needs to trigger that movement outside of the current narrow range. A drop below 58k would be bearish and new monthly highs bullish.
Our Short term cycle is still pointing up and our trend-following systems is still bullish. My gut tells me to be looking for a reversal as the books for November open. The monthly chart pegs risk to 10k. If the market just witnessed a double top, or in EWT terms an irregular top, the decline that should follow will be a forceful high rate (HROC) of change trend. The daily bar’s TEM supports this idea of the trend if a sell is triggered via support break or MA cross-under.
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Great and Many Thanks,
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
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