Daily Report – Bitcoin and Market Update (April 18 2022)
The weekly chart maintains its strong correlation to equities with the correlation coefficient at 0.88 on the 7-week basis, while BTC remains inside the large pattern of low-momentum movement.
The 50-week average continues to decline slowly, but surely. The retracement has come off the 48.5k USD highs to the current 44887 USD on the 50-week average basis. This reveals a mild downwards trajectory for bitcoin, on average, ever since 2022 started.
Local ascending channel or a flag corrective pattern has been formed, which in combination with the descending 50-week average – all together hints on potential downside continuation, if only the pattern breaks down evidently.
Because this is a pattern inside a pattern situation for bitcoin, I’d argue the indecision levels are high. In such a situation, the direction of the breakout is not set in stone just because of the way the pattern is shaped. The way I see it is simply that bitcoin price action is neutral with a bit more of bearish potential than bullish in the near-term, not impacting the longer-term outlook, which remains positive.
The daily chart has shown the very first symptom of potential reversal setup in a very long while.
Namely, the BPRO divergence system has spotted a 73% strong bullish divergence, which will likely get confirmed with a daily close above 40500 USD level. While this is not confirmed or a guarantee of future performance, this lays the ground for the upwards reversal.
The BWAP resistance cluster backed by the price action and volume is adjusted at 43.1-44.1k USD. If broken to the upside, it may set bitcoin up for enough of momentum for a follow-through to the upside and towards the 50000 USD resistance.
A failure to close above the $39000 level may ignite a spark for downside continuation into the 37000 USD regions.
The middaily chart reveals an even stronger divergence setup of 82% technical strength among other technical points to note.
A 12h close above the BWAP resistance block at 40-40.5k USD will likely add to the momentum on the short-term upwards basis.
Additionally, such a close will align with a confirmation of a downside breakout failure, which yet again builds a potentially bullish narrative on the premise, that failed patterns tend to perform better than the regular patterns.
On the resistance side, the $46000 area seems to be crucial for the 12h chart of bitcoin as it had revealed failure and trap over it before. If bitcoin manages to show strength where it showed weakness before, it potentially shows bullish advantage and higher chances for a follow-through to the upside.
The MTF chart reveals a potential reversal setup with several reasons behind it.
Firstly, the CTF Trailer Stop at $40021 marks an invalidation level for the bearish advantage. A close above this level will let the bulls re-gain the control over the market with more chances for upwards continuation.
The Level Line support at $40152 – if defended – brings higher chances for a follow-through to the upside towards the next Level Line with a resistance at $42699.
Furthermore, if the said resistance is reclaimed in a bullish manner, BTC may continue higher into the 45353-46856 USD zone.
The hourly chart represents a fake breakout at the bottom marks for a reversal setup, while failed patterns tend to perform better than regular patterns.
Hence, bitcoin is quite likely to reach the prior range high area around $41500. Having met a local resistance region at 40800 USD, a short-term session met supply 40700-41000 USD.
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
Bitcoin: Exchange Reserve – All Exchanges
CryptoQuant explains: “
The total number of coins held in the exchange. As the values continue to rise in reserve, it indicates higher selling pressure and has shown an opposite trend in price in general. (For stablecoin, value rise indicates buying pressure). For derivative exchange, since coins could be used to open both long/short, a rise in reserve values indicates possible high volatility.”
Clearly, bitcoin continues to be withdrawn from the exchanges as the on-chain metric plummets and continues to make new lows, unseen since 2018. The more assets are held on exchanges, the more potential selling pressure. The other way, bitcoin moved from exchanges to external wallets typically implies the investors’ unwillingness to sell in the near-term.
Additionally, CryptoQuant says “We will reflect newly-created cold wallets of Coinbase Pro, and Kraken at Apr 19, 00:00(UTC).Please note that this will affect ‘BTC: All Exchanges’ related metrics.” – posting that ahead of the change so that everybody is reminded about the change in the metric.
The sentiment has worsened as bitcoin reached the support at mid-high 38000s USD.
Now, at 24 points on the sentiment scale, bitcoin is clearly given bearish expectations from the investors’ feelings point of view. More often than not, this could be interpreted on the contrarian basis.
Naturally, the crowds are always right in the middle of the trends and always wrong at the extremes. The fear has got extreme, so it is quite apparent that whenever investors get more pessimistic about the near-term bitcoin performance, the more buying opportunity it generates.
This time is no different to me, hence, and I consider this relatively better buying than selling opportunity. The sentiment marks bitcoin as “cheap” in the chart attached. The patience is required and the reversals are not imminent or immediate. Instead, delayed gratification skills will likely reward those waiting for bitcoin to appreciate in value.
That’s all for now. Hope it helps.
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