RKT’s pivot point in 3rd week of Apr
So I see a lot of people complain about RKT’s price action – it looks like it’s continuing its trend of trading sideways with an oscillation since its IPO, even with the large spike on Mar 2nd. However, I just want to remind everyone that we have not completed an oscillation cycle after the big spike. I will do a quick FFT analysis to get the frequency of oscillation and show that the 3rd week of April is the turning point. I will discuss the two outcomes: if RKT continues its oscillation (short term bullish), or if RKT wants to trade with a new regime (unclear outlook).
RKT closing price since IPO:
Taking the Fourier transform, and then fitting the low frequency peak with a Lorentzian:
We get the following parameters:
y0 =25.305 ± 2.89
A =0.012523 ± 0.00457
x0 =0.032551 ± 0.00155
B =0.00015029 ± 6.38e-05
x0 is the peak center, and a frequency of 0.032551 (1/trading days) translate to a period of 30 trading days. From the Mar 2nd spike, which is very well-defined, we get Apr 14th as the next point in the cycle.
As we look to be currently in the trough of a cycle, there are 2 possibilities:
- We continue the oscillation cycle, meaning that we will turn bullish over the course of the next week or 2. This can be caused by swing traders and technical traders anticipating the end of this cycle and turning it into a self-fulfilling prophecy.
- It’s possible that others already consider the big spike to have broken the cycle and RKT doesn’t continue trade with the oscillation. This can be both bearish and bullish, but at least we will trade in a new regime and people can stop complaining about how RKT is trading sideways.
I personally think RKT will likely continue to trade with the oscillation, because the big spike happened to occur at the same time as the bullish part of the cycle, which would reinforce the oscillation. I think there needs to be a big piece of news at the trough of the cycle to break it.
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April 2, 2021 at 07:11PM