Daily Report – Bitcoin and Market Update (August 20 2022)
The middaily chart has displayed a violent breakdown instance, to the downside.
BTC has sliced through the main support threshold at 23165 USD. As a result, it’s lost its bullish edge for the medium-term trend.
The CTF Trailer has signaled a bear label, which suggests that the bears are back in control over the market. The bulls must reclaim the Stop level at 23242 USD, in order to break out to the bullish mode, again.
At the same time, the price action analysis suggests that the rising wedge pattern has been broken down. A violent breakout is additionally confirmed by abnormal volatility burst, adding confirmation to the setup. What follows, is a larger breakout failure, and BTC trading back inside the previous range territory 17.5-22k USD. Such a breakout failure puts BTC in a danger of further collapse, as failed patterns tend to perform better in the opposite direction than normally.
The MTF chart has displayed a valid confirmation signal to the downbreak. It came with the first bar closing severely below the Low BPRO Band, which confirms abnormal volatility outbreak.
The prior lack of follow-through on the top breakouts in the 25000 USD area was followed by trend inflection, and selling forces activated.
Currently, BTC is trading in the Low Band territory at 20.8-21.5k USD, and there can be minor hopes for a local upwards pullback into the 22-22.5k USD range.
However, the BPRO Level Lines show resistance levels 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 shows first signs of a potential reversal to the upside, as the selling has got exhausted, locally.
The BPRO Divergence System has displayed 73% Div note, which suggests relatively mild chances for an upwards pullback. However, the breakout to the downside is confirmed to have changed the trend direction. So, any upwards pullback may rather be expected to be short-lived.
The short-term picture may get a bit more choppy, as BTC tries to build a base at the end of an over-extended trend. Such a reversal rarely ever is immediate, however.
The sentiment has worsened substantially, following the BTC price plunging almost 10% in a day.
Now, at 29 points on the scale, a more intense instance of fear seems to be back in the market, again.
The lower the index print, the more emotionally may traders react to the price action fluctuations. Because of the emotional biases, many investors will feel trapped by their loss aversion, almost forcing them to cut on their winners, and hold on to their losses. More often than not, this puts traders in serious risk of liquidating their account, as they hope and wait for the market to break even for their entry levels.
Such a rapid sentiment change may hint on the further direction of the market changes, as typically, rapid chances come in a couple of waves, rather than just a single price shock – especially, when it’s not a direct result of a news-driven event.
For this, it’s better to be safe than sorry. Other indicators may be factored in one’s strategy for more accurate decisions, e.g. breadth (see thread below).
Finally, full details were shared throughout my latest webinar. Catch it below.
Hope it helps. God bless.