Daily Report – Bitcoin and Market Update (August 01 2022)

HTF 1M:

The monthly candle closed with a slip through the 200-week average, to the upside. After closing June below the average (exceptionally rare case), there was an over 30% recovery move upwards, off the lows at 17500 USD.

Price action wise, the swing low support from Q3 2021 has now turned into resistance, so traders may expect the price barrier within 28000-30000 USD.

As such, a monthly close through the area may confirm a major reversal, or a new bull market rally confirmation.

HTF 1W:

The weekly chart has printed the first successful close over the 200-week average (22500 USD), after the capitulation crash occurred in June, down to 17500 USD.

Such a successful close may be an encouraging buy signal for many investors. Just on this basis alone, there might be a larger self-fulfilling prophecy effect, promoting the trend to the upside, at least in the short term.

Historically, the 200-week average had provided BTC prices with a relevant support area.

With the correlation coefficient advancing to 0.81 now, the BTC price is more dependent on the stock market prices, on the 7-week average basis.

Furthermore, that has been a major confirmation of a “hook turn” on the RRG chart, in favor of Bitcoin. It is additionally important, as there are signs of pending sector rotation – away from the risk-off assets, and toward the risk-on assets. This provides encouraging environment for a larger bear market rally, for the first time in many months.

The odds have turned slightly more bullish for BTC, for the first time in a long while.

HTF 12H:

The middaily chart continues to move within a local consolidation zone – a corrective wave.

As a result of a failed breakout on top, BTC marked the swing high at 24700 USD area, and is not attempting to build a base at the BWAP block – 22700-23200 USD – as defined by the price, and volume.
The CTF Trailer is currently promoting bullish implications as more likely over the bearish implications.

As long as BTC continues to close the sessions over the Stop $22265 level, the bulls remain in charge, from the technical viewpoint.

While it does not necessarily mean an immediate pump effect, it may suggest that there are conditions for the bullish movements to sustain and persist.

MTF 4H:

The MTF chart displays signs of local weakness, as warned on the last market report discussing the lack of follow-through from the BPRO Momentum Bands.

Instead, BTC has recorded a mild instance of a failed breakout, or an overthrow. This comes as a result of Bitcoin’s inability to persist outside the regular volatility zone. Because the volatility factor is significant to validate a breakout, the very lack of such validation promotes mean-reverting patterns and fakeouts.

BTC is now moving inside the BPRO Band range 22.1-25.1k USD and it can be considered the regular volatility zone. Any breakout might only be really confirmed, once the prices thrust through the either Band.

On another note, resistance level is defined by the BPRO Level Lines, as 24802 USD.

Furthermore, the Level Lines display support levels as defined below:

21440
19615
17104

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

LTF 1H:

The short-term chart displays an overthrow on top, typically leading to short-term retracements.

Such a top breakout failure is followed by a stronger move to the downside. It is, because failed patterns tend to perform better in the opposite direction than expected.

The previous swing high $24280 was broken, but there was no follow-through to the upside. Instead, BTC is undergoing local retracement, also after losing the local support at $23450.

If this tendency is to be maintained, BTC may see further deterioration toward the 21800 USD – at the same time invalidating the medium-term bullish setup.

Unsurprisingly, a lot of noise is being recorded across the lower time frames. Noise trading promotes mean reversion and range patterns, as they are part of more random walk type of movements.

Random movements often may require gambling strategies with no statistical advantage – martingales, or anti-martingales.

FEAR/GREED INDEX:

The sentiment has clearly improved, when compared with the index prints from a month ago.

Naturally, it’s rather impossible to sustainably time the market entries with the sentiment barometers only. However, since recording the capitulation bottom reading at 6 points on the scale, out of 100, BTC has recovered by over 30% off the lows. This had already provided substantial edge and was proved profitable for many contrarian investors.

Now, at 33 points on the scale, there seems to be more persistance and determination to continue the already-going move in the same direction. It’s the part where one does not fight the trend, as the momentum is generated by the money moving the market.

In such case, the money seems to be moving upwards.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

On the on-chain side, BTC has recovered back above its breakeven levels.

At the 0.06 ratio, the NUPL had showed only a few instances where BTC would snap back downwards, after the NUPL had entered back into the positive regions.

While the history does not repeat, it often rhymes.

The lower the NUPL prints reach, the better the buying opportunity for BTC investors.

Hope it helps. God bless

P.S.
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