Daily Report – Bitcoin and Market Update (April 11 2022)
The weekly chart is displaying local weakness after the market rejected follow-through on the mean reversion.
The BTC vs SPX correlation coefficient is at 0.88, which still stands for relatively strong connection between both of those markets in terms of directions of the moves. Accounting that, bitcoin has been definitely dependent on the movements of equities. Hence, today’s drop in price should not be much of surprise seeing equities open sharply with a gap down through main support levels.
Long-term implications of the pattern bitcoin’s been trading inside since 2021 between 28800 USD and 69000 USD, are that as long as BTCUSD does not reclaim the 50-week average, the risk of retesting the pattern lows at 30000 USD or below are increasing.
On more positive side, rarely ever the first attempt to breach long-term averages is successful and there still had been the first successful close above the average in a while.
That being said, the longer BTCUSD stays below the average, the more risks and dangers of falling lower into the lower range.
The BPRO CTF Trailer implies for the main resistance to be at $49134. That’s the long-term invalidation level for the bearish implications initiated in October 2021, half a year ago. Breaking above it most likely would imply the retest of 70000 USD area.
The daily chart keeps retracing off the 48000s USD highs to $40800s with no stronger upside pullback so far. The bearish advantage continues.
As signaled by the BPRO a couple of days ago, the bears won back the control over the market and ever since, bitcoin has been plunging or in other words – following equities.
The Baseline 20-day average shows resistance at $44200, and at one point mean reversion process should eventually get bitcoin back into this region, sooner or later.
The average resistance aligns with the BWAP – price & volume based supply block at 44.7-45.7k USD. The near proximity of those areas suggests we consider 44200-45700 USD area to be one cluster of resistances.
The middaily chart continues along with the bearish advantage signaled at the end of March.
The coil pattern has expired its measured move following a breakout to the downside, theoretically. The assumed measured move would target $41500s, which aligns with the BWAP block at $41200-$41700. Technical analysis learns that a potential bounce should be taking place around those price levels.
The CTF Trailer has had a clean bearish control symptoms continuously, and now remains on more bearish side until BTCUSD breaks above $44324. This is the main invalidation level for the bears.
Until such a break happens, bitcoin is subject to further declines to $40000.
Clearly, bitcoin is now in the main decision point at the support region.
The MTF chart shows BTCUSD to be in the major decision point, where it’s a do or die type of market twist.
Now BTCUSD is trading at the very lows of the BPRO Bands showing the volatility range. An ugly close below $40800 seems to be calling for much lower levels. The High Band resistance is at the 44.2-44.6k USD region, which confirms the importance of this zone defined by the 12h chart, too.
For the low levels instance, there is a Wave Pivot level at $38200, which could act as the next theoretical support, should $41687 get not reclaimed above.
Furthermore, BPRO Level Lines show resistances at:
Meanwhile, BPRO Level Lines show supports at:
These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement
The hourly chart shows a series of consecutive bearish thrusts to the downside with seemingly no patterns signaling reversal as of now.
The only two main short-term levels I see relevant for the chart are $42012 and $43602. In approximation, I would assume an overall importance of $42000 and $43600 areas.
Should these levels not get broken through to the upside anytime soon, equities may drag bitcoin lower ahead of the CPI prints coming up tomorrow.
For the support side, I would pay attention mostly to $40000, $38200 and $36748
Bitcoin: Net Unrealized Profit/Loss (NUPL)
With referrence to my recent NUPL section of reports, here’s a quick update.
NUPL ratio for BTC is now at 0.418, which is in neutral/transitory and nowhere near market extremes related to major market peaks or bottoms. It’s more often than not typical of low-momentum trends or consolidation periods in the price history.
No factual divergence has been spotted for now that would favor either bulls or bears. It moves in accord with price.
Let me refer and quote back on my recent sentiment analysis here: “
The sentiment worsens and the fear strikes back – again! (…) The market sentiment flips back to the pessimistic side and one may conclude it comes with an overall conviction, that the market is “bound” to fall and crash. Naturally, it’s impossible to predict future and the past performance can never be a guarantee of future performance. Yet, there is some predictive power to the fear/greed index fluctuations, among other market indicators. Historically, fear brings better buying opportunities than selling. And this is the way I see it. It certainly does not allow to time a perfect reversal entry, but it does show when the market is valued as “cheap” on the contrarian basis.”
Now, with the index at 32 points, there does not seem to be much of change in terms of sentiment. The contrarians could likely still conclude that the market is “cheap”, but in no means does it mean it cannot go any cheaper. I would expect sort of worsened index read after today’s market close, getting traders closer into the extreme fear territory. The current sentiment thesis does not back up the idea that the bottom is in, which typically comes with extreme fear readings.
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