Daily Report – Bitcoin and Market Update (August 13 2022)
The middaily chart continues to throw BTC prices over the preceding swing highs.
However, those breaks tend to represent failures, as the overthrows populate. Such breakout failures tend to promote mean-reverting tendencies. It means, that every next overthrow pattern comes in, BTC loses a bit of its bullish edge. Also, the downside risks odds are increased a bit, when that happens.
The CTF Trailer steps up, as BTC prints new highs. Overall, this is an upwards trend, but it’s relatively slow-paced. It is yet to generate a major up-thrust to confirm the main breakout, over the 25000 USD resistance.
Until that happens, the Bitcoin bulls have the upper hand over 23164 USD level.
The MTF chart continues to move inside the regular volatility range, defined by the BPRO Bands.
As long as BTC does it, there is no valid confirmation for a volatility burst. Without such, BTC is more vulnerable and likely to move on a mean-reverting basis – level to level, between the Bands.
The Momentum Bands define the said range to be at 22500-25500 USD. A strong close outside either Band may confirm there’s enough momentum to pursue the movement in the direction of the breakout.
Moreover, the BPRO Level Lines show resistances at:
At the same time, the Level Lines display support levels as defined below:
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 can be expected to act as the next “magnet”
The hourly chart continues to display mean-reverting tendencies for the Bitcoin prices.
It is, mainly, due to the increased population of fake breakouts, at the range high territory.
This is additionally backed by the BPRO Divergence System, which adds validity with the bearish divergences.
This suggests that the short-term trends are getting overextended, overbought – or simply exhausted, as BTC approaches the resistance region. It may stem from the lack of momentum at the breakouts, which is followed by breakout failures, as there is not enough demand to sustain trading at the higher prices.
Such investors behavior, typically, symbolizes early signs of a distribution pattern. Oftentimes, it is followed by a pattern breakdown and a leg down.
So, unless BTC decides to inject a burst of bullish momentum at the top, the chances are Bitcoin may fail to hold the pattern, pulling the prices lower.
It is nowhere near confirmed. However, every next overthrow at the resistance boosts the odds for a downside resolving.
The sentiment has clearly improved among the Bitcoin investors.
However, at 46 points, it can still be classified under the fear category.
As mentioned many times in the past, the underinformed herds tend to sell the bottom and buy the top, every time. It is, due to their behavioral biases, such as: cognitive dissonance, representativeness bias, loss aversion, or misinterpretation bias. All together create a phenomenon in the financial markets, where the majority is always wrong at the extremes – the most bearish at the selling climax, and the most bullish during the blow-off tops.
Although, the crowds are always right in the middle of trends. Once the trend develops, the momentum principle makes it persist in one direction, more often than not. Because of that, trading counter the trend after it’s developed makes it a losing bet, on average.
In the current Bitcoin case, this situation can be identified as the latter.
More insights were shared in my latest webinar. Market analyses are always time-sensitive, so catch up as soon as you can – just click on the link below.
Hope it helps.