Daily Report – Bitcoin and Market Update (August 03 2020)
Monthly closed a monster bullish engulfing – type of candle adding huge advance to the macro scale momentum of upside trend. There is no doubt that bitcoin wants to signal how bullish it can get in the following months. On March 13th dump I claimed bitcoin would still rally over to new ATH in the following months/years. And I 100% claim the same right now with this difference, that we have just got huge market confirmation that generated long-term breakout buy signal. One of the most important technical indications in the last months and years. Monthly closed at 11356 on spot USD price and made it 2nd highest monthly close in bitcoin history. The prior time it only once closed above that level was November-December 2017 period when BTC was reaching all time highs of 20k. This super solid monthly bullish candle is almost shaven-top, that shows amazing strength of bulls at the time of closing July. Right after, we rallied even higher to 12100s confirming further upside potential. Any Price Action held above 10500 support level (prior resistance) within a monthly session, is considered long-term bullish. Next monthly resistance is around 14000 imo, which should also be a matter of time to reach. If by any chance global markets die because of next pandemic/black swan or other unpredicted event, it may only invalidate BTC bullishness with monthly close below the July’s breaker candle low of 8900s. Having said that, I’m expecting long-term upside expansion beyond 14000 in the next months.
Weekly closed as a bullish breaker candle adding to the upside momentum. Short-term rejection proved that 11-12k zone works as intraweek supply. We made a higher high for breaking 10.5k while tapping into prior resistance zone of highs of 2019 between 11.5 and 14k. Despite the intense and violent nature of the rejection, I claim such price action to be quite typical for bitcoin. While on vacation, I mentioned that we could expect correction after filling 11.7k CME gap from August 2019, which we did see. For this reason, the drop didn’t come as surprise to me at all. Because bitcoin closed the week yesterday above 10.5k I consider the close to be bullish and positive for bulls. Best for bulls undoubtedly if this week closes above 11.5k level of the 2019 highest close. This would quite straight forward prove weekly bullishness to a full extent. Weekly overall is bullish, so is monthly – even more. Therefore, short-term dips are for buying.
Daily seems to have reclaimed the breakout level of 10.5k as the new support with the flash dump and as long as 10.5k level is held as support, short-term dips around this level are for buying. Momentum printed somewhat bearish divergence while in overbought area that overall confirms short-term bearishness more than bullishness. Moving average supports are as follows: MA50 9700, MA100 9500, MA200 8800 and these levels remain on the table as long as btc keeps trading close to 10.5k. As mentioned few times already, the mechanism of the flash dump reminds me exactly what happened back in 2019 at 8->6.2k drop that happened to be a liquidity hunt for hungry bulls. This might have had to do with global trigger as gold and silver at the same exact time noted a quick drop as well, although not as large. Overall as long as bitcoin trades with overbought bearish local momentum, its not a good idea to long at any resistance for short-term entries. As large timeframes are bullish, it means short-term DIPS/corrections are for buying. Then safest to focus on buying bottoms rather than selling tops, as the corrective declines of price are by definition short-lived and provide with not so good risk/reward. Safest confirmed daily chart entries come with bullish momentum cross below overbought area (see #birbicator-bot pinned tutorial)
MTF picture is clearly showing bitcoin trading at the most neutral and unidirectional level in the entire chart. 9150-9250 is seemingly the worst place to make any sort of position decisions. Next days should bring intensified volatility which would most likely bring lots of liquidations across the market. Rather than making the wrong move, I suggest one should wait until the direction comes in a 50/50 btc usd setup. It would save the nerves, money and time. I personally anticipate retest of highs sooner than retest of lows but it’s impossible to predict any sort of black swan events like the one that reportedly crashed the market in March this year. Volume Profile Visible Range clearly suggesting the largest volume appeared while trading at 9250 level which needs to be reclaimed on the upper side by bulls to turn more to the bullish side of the MTF 8100-10500 range. Otherwise, we are still trading below MA50/200 setup, which because of lack of overall direction is not truly reliable.
As MTF chart presents, I have applied exactly the same mechanism of anticipated consolidation/range that comes after flash dumps. Just the way it also did on March 13th, after flash crash, market remains in the state of PTSD shock and tends to act less predictably and less rationally (TA-wise). For this reason, I highly suggest one doesn’t over trade with short-term positions for the next days until BTC price action goes back to the “natural” and normal mode. 1B liquidations mean that market structure is going to change a bit as a lot of new inexperienced traders that were over leveraged, got simply liquidated so they will not participate/trust bitcoin now, so we could expect a bit more laziness (less interesting days) from bitcoin in the next days. Technically speaking, MA50 works as support at 11000, while 11750-12000 is the nearest strong resistance area and short-term supply that might provide one with decent short-term short entries for scalps/intraweek swings. Easiest day trading formula would suggest as simple as: long range lows, short range highs and repeat until invalidated. 50% retracement level of the entire range 10500-12130 is located around 11400 level. For this reason, 11200-11400 area is the least safe area to open new positions.
Hourly Bollinger Bands are tight and squeezed while price action remains trapped between MA50 11370 resistance and 11000 MA200 support. Bollinger Bands printed tight 11050-11250 consolidation that would soon see a larger move. I’m not trusting TA so much on low timeframes for the next hours because of the market being in the PTSD state that makes technical analysis not so well applicable while traders are overwhelmed with emotions after losing a bit chunk of their portfolios after -13% bitcoin flash dump. My suggestion is to let it settle a bit, give it a day or two to stabilize and provide you with range extremes for entries: long range low, short range high if you are a short-term/ day trader. Until then, I am not expecting any surprising movement from bitcoin unless global markets are influenced by economic conflicts of USA and China. Suggested to watch bitcoin in the correlation with gold and silver as these often align very well. As always more details are to be found in the #video-report channel and the exclusive video report I will prepare and record for you in the next hours to help you better understand the market context. Until then, we have already released the latest podcast episode with somebody extremely important to me. Namely, MY OWN GREATEST MENTOR, Arun Chopra. He is the best of the best and if you care about your money and investing, then I swear to God, it’s a sin to miss out the best technical and market analysis podcast episode with my mentor.
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