The Rainbow Chart divides the historical Bitcoin price into ten colored bands based on a logarithmic regression. The lower (blue) bands indicate accumulation zones, the upper (red) ones an overheated market. It's a rough heuristic, not a prediction – the price has repeatedly broken out of the bands in the past.
The property that makes this chart easy to misread: the bands are not fixed. The fit is computed from ALL data so far, so every new day nudges the curve — and the whole rainbow with it. The color the price sat in two years ago may have changed since, without the price moving at all. Rainbow therefore never says “this is the bottom”; it says “this is how far the price is from its long-run trend”.
The second thing is the logarithmic axis. The distance between bands looks the same everywhere, but near the top it means multiples: one band at the top is a very different amount of money from one band at the bottom. And because the regression is a power law, it flattens over time — bands that meant tenfold moves in 2013 mean a fraction of that today.