Transcription
The Banana Zone has been a phase in Bitcoin's market cycle that has been spoken about for quite a while now. But what has happened to this Banana Zone in particular? Why are things slowing down? Why aren't they progressing towards the upside like we've seen in the previous cycles? Today's video is going to be talking about this Banana Zone in a lot more detail. So subscribe to the channel for more videos like this in the future. Like this video if you enjoy content like this going forward, and let's dive right into it.
Across time, the Banana Zone has represented the parabolic upside phase in each market cycle for Bitcoin especially whenever price would breach old all-time highs. This is effectively the trigger that gets Bitcoin into price discovery and beyond. And we've seen that these price discovery phases begin that parabolic upside phase, but not without some corrective phases before then. And if we look across this chart, we'll notice that they tend to be pullbacks in that price discovery phase, and it's not just one, but it's also often two, maybe even a bit more than that, as we'll see from my charts in fact.
But in this phase, in fact, we've seen a corrective period already around the old all-time high region. This was the reaccumulation phase after the halving that we saw get developed, and now we're seeing a corrective period in the market as well. And this isn't a period in the market that we we were surprised about because in late November we spoke about how historically speaking, Bitcoin tends to pull back during weeks 6 to 8 in the price discovery phase. And it's been very clear that Bitcoin experiences these pullbacks in those weeks, and we need to be cautiously optimistic as we approach those corrective weeks, but then be really risk-off once we get there.
And ever since weeks 6 to 8, which is effectively this period, we've been in a pullback; we've been in a corrective phase for Bitcoin to the point where we've actually lost to this range and produced a downside deviation below it. This downside deviation also isn't necessarily out of the ordinary because we've seen these downside deviations across the cycle already. Granted, these have been shallower pullbacks, as we'll see in a moment, and the shallower pullbacks have produced downside wicking loads of reaccumulation range. So still downside deviations, but to a lesser extent around the post-halving period. However, we have seen a 17% pullback below the reaccumulation range. So this is a downside deviation in candle-bodied form. So this cluster of price action has actually developed below the reaccumulation range, so that's quite a substantial downside deviation in candle-bodied form—a far cry from what we've seen before here in downside wicking form.
So yeah, yet again we're seeing a downside deviation, and what's interesting about that is that this is an 18% pullback. So magnitude-wise, very similar to the 18% almost that we saw around the post-halving period. And so we're seeing that this is now a brand new cluster developing as part of the first price discovery correction in Bitcoin's price action in this cycle. So this is still price discovery correction number one, and we tend to see at least two. 2017 has shown us that we can even see up to four. And we have to still always bring it back to the fact that this isn't a downside deviation that's caught us by surprise necessarily because it's been a story of reaccumulation ranges in this cycle that we tend to see these downside deviations, and that's what we've been talking about already up to this point in this video.
So the fact that we're seeing a downside deviation right now, it's not out of the ordinary. However, the depth here is something we we didn't really talk about, but the depth here is still very similar, not just to what we've seen in this cycle already because this is a 30% pullback; we've seen a 33% pullback just months prior. In fact, if we're talking about the previous downside deviation below the previous reaccumulation range, then we're seeing a very, very similar pullback in that regard. This was a 30% pullback, and this was a 30% pullback as well. Naturally, this is also a deeper pullback based on what we've seen in the previous two pullbacks up to, you know, these three pullbacks; that was a 22% average, and we've been getting deeper pullbacks as the cycle has progressed and matured.
But if we look at 2021, 31% was that first price discovery correction period; 55% was a deeper pullback, and then we saw a 25% pullback. So if we just juxtapose that with these pullbacks, then we'll notice that the first pullbacks were shallower. So you can see that 31% here in 2021 and 16% and 8%; those are shallower pullbacks, and then we get deeper pullbacks—55%, for example—but 2021 and also 2017 show us that later on we will get actually shallower pullbacks. So if we're mid-cycle, then we see deeper pullbacks as the cycle matures, but if we're looking at first price discovery corrective corrections, corrective retraces, corrective periods, then this is the first price discovery correction for the 2021 cycle, and this is technically the analogous pullback because this is also the first price discovery corrective period. So that's 30%, so very, very similar to not just the 2021 first price discovery correction depth, but also very similar to the post-halving corrective depth of 30%, and also if we're looking at 2017, 2016, then the first price discovery correction was 34%.
So we've seen these pullbacks take place already in terms of 30% in the past; it's not just in the past 2017, 2021, but it's also the post-halving period—30%. So 30% is a period that tends to—30% is is a corrective period that we tend to see quite a lot. But now that we've seen that pullback take place, the 30% downside has taken place; we're already starting, or at least we've we've tweeted some two weeks ago that we were starting to see declining sell-side volume, and that typically happens when we see prolonged sell-side momentum towards the downside. Sellers simply get exhausted over time, and then we started seeing initial signs of a bullish divergence and higher highs on the RSI, lower lows on the price action—typical bullish divergence developing. And we've seen this bullish divergence play out since then when we talk about 82k in mid-March, and now we're at around 87, 88.
Now that we're approaching the end of the month, that bullish divergence has played out because if we see these lower lows here and the higher lows here, that's a bullish divergence, but now we're ascending in a higher low fashion in the RSI and in a higher low fashion in the price action, which means that while this was a a divergence, now we're converging; there's no longer a divergence. And so that bullish divergence has already played out, and also at the same time that declining sell-side volume, that's also a tendency that has persisted. You can see that over time we've just been seeing declining, declining sell-side volume, and buy-side volume has been trickling in, so it's a buy-side dominated market, and that's been quite a shift there as well.
So mainly market participants have been really, you know, dominated by pessimism, whereas already over these past two weeks the signs have been there that the reversal was going to be occurring, and one of those signs has been that crash into the low RSI—not talking even about that bullish divergence that we just mentioned—but it's also the fact that we're recovering from the oversold RSI region, and every time we've done that we've seen prior price reversals towards the upside, especially if it's been a V-shaped reversal, similar to what we're seeing here; we're seeing here. But at the same time, this is a chart we've already spoken about, but this bullish divergence—lower lows in the price action and higher lows in the RSI—that's something that we've been seeing in this cluster and even in this cluster and also in this cluster. So so the V-shaped reversal, like we see for example here, that's actually quite a rare occurrence. What we see typically is a lower low in the price action, higher low in the RSI, and that's happened already quite a few times in this cycle, and it's happened once again right now.
So what's happened to this parabolic phase? What's happened to the Banana Zone? Well, we're in that pullback period right now. The first price discovery correction and first price discovery corrective periods are part of that Banana Zone, so we just need to recover from it and transition into the second price discovery uptrend. And so how do we do that? Well, we first need to reclaim 93.2k to reclaim and resynchronize with that old reaccumulation range below which we've deviated. But to get us to 93.2k, we have to first repeat something from 2021, and in 2021 we saw clustering at the highs here before crash to get us into this environment—this triangular market structure dictated by these two bull market EMAs, the green 21-week EMA and a 50-EMA right over here. And we're seeing a triangular market structure actually developed right over here, just like in 2021. We need to weekly close above 88k or so to get us in a position whereby we are able to reclaim this 21-week EMA as a support before rallying higher, and this can be quite a volatile event. In fact, we've seen upside wicking in the past below this this EMA in an effort to try and reclaim it, downside wicking as part of a volatile retest. So this is something we've seen before here, and that's effectively the confirmation signal that we we're waiting for right now to see additional upside.
And so once we're able to reclaim the 21-week EMA as a support, then we're going to get into 93.2k, and that's going to be a really important level to reclaim because that would get us into resynchronization mode to get us back into to effectively the range and to get back on track and get back into this range that's going to enable us to rally a little bit higher and transition into what is effectively going to be the second price up price uptrend, so price discovery uptrend. So we're slowly trying to finish up this price discovery correction, and we're doing so by deviating below the reaccumulation range, but we're trying to shorten the distance here; we're trying to reaccumulate once again to resynchronize with this reaccumulation range, and by doing that we'll be able to to then break out from that recognition range altogether and transition into the second price discovery uptrend, and that's where that Banana Zone would be back.
So this is the Banana Zone still. The Banana Zone doesn't just occur in just one vertical line towards the upside. The Banana Zone is comprised of an uptrend, of a first discovery price discovery correction, of a second price discovery uptrend, and also of a second price discovery correction, and this is also what the chart maps out as well—that we can have a correction phase here and then a correction phase there, but this is all part of the process in an otherwise strong parabolic upside movement. Of course, these corrective periods do look a little bit different on this chart compared to my chart. If we look at my chart, then you'll see that these uh price discovery corrections can occur quite frequently. In 2017, we saw one, two, three, and four price discovery corrections. Also in 2021, for example, we saw one right over here, two—55%—and then three—25%. So if we're talking about this current pullback here, this is the first price discovery correction. 2021 saw three; 2017 saw four. So I think we can bank on at least one more price discovery correction occurring in the future.
And if you're thinking about the third one, that's going to be a high-risk, low-reward opportunity for sure, and the fourth one I probably wouldn't even consider simply because that's going to be a little bit risky to be waiting out for a fourth price discovery correction. I think once we transition out of this first price discovery correction into the second price discovery uptrend, you have to pretty much be prepared for a second price discovery correction in the future and then that final uptrend, and that final uptrend is probably going going to look like something like this, in fact. That third price discovery correction is probably going to be a short one, and we're going to see a shallow pullback probably, and that's essentially what we're going to be looking at—maybe not as parabolic as 2017, and you can see that this parabola changes maybe a little bit in terms of diminishing return. So maybe this is going to be the sort of upside we see in that final uptrend, but really important to understand that we have at least one more price discovery correction ahead on top of the current one that we see, and of course we have a second price discovery uptrend and probably also a third price discovery uptrend before we finally transition into a bear market.
So these are charts and analysis that I tend to share on a regular basis on Twitter and in my YouTube, but if you'd like to be working along with me as we navigate this cycle, then I'd be more than happy to help out. Feel free to in the call if you'd like to consider working with me, and if we were a fit, absolutely I'd be more than happy to roll up my sleeves and work alongside with you to navigate the cycle going forward, navigate all the phases in this Bitcoin market cycle. And of course, if you're in really serious about investing in yourself and skilling up, leveling up, making the most of this portion of the cycle which comes around every 4 years, then absolutely feel free to click in the link in the description down below, book in a call with me. Of course, it is going to require a budget, but any investment in yourself is always going to require a budget. So in any case, if you're interested, feel free to book in a call; I'd be more than happy to help out on your crypto investing journey. But that being said, subscribe to the channel for more videos like this in the future. Like this video if you enjoy content like this going forward. I'm Capital, and I'll speak to you in the next one. Speak to you soon.