Daily Report – Bitcoin and Market Update (August 30 2021)

HTF 1W:

Weekly chart is nearing the overbought side of the trend and momentum, which is not surprising after a heavy push as high as +72% from the lows of June/July. Beautiful bounce overall off the 50-week average (orange mean) which currently supports BTCUSD at 36.6k in case of an unexpected 20-30% drop from a FUD news-driven selloff. If you remember the first time I posted this long-term triangle concept for Q3/Q4 transition, Im still expecting bears to step in at one point anytime soon, at least for a local correction to high 30000s or low 40000s. It makes a lot of sense knowing that all the past major mean reversion pullbacks ,that’ve happened ever since the bull market start in December 2018, usually gave 60% pumps followed by corrections. It feels BTCUSD still has some more room left to grow into 53000s as overall 53-58k region is just a matter of time. With that assumptions, it’s also worth taking all the pros and cons, strengths and weaknesses into consideration.

There’s a tiny warning signal from the last week’s candle close. It’s a high wave doji which looks like a reversal doji to me which could be found in the most technical analysis books. Knowing there’s been massive rally for bulls in last 5-6 weeks, I’ll take this weekly doji as yet another reason to lock in some profits while we’re in the high 40s – JUST IN CASE.

Long-term triangle breakout target corresponds nicely with the 5th wave, extension targets inside 90-120k areas. We will not go there in straight move up though. If you are medium timeframe / swing traders, it’s worth collecting this 50-70% ROI from an unleveraged swing to buy back lower.

Based on this weekly chart my conclusions are:

Long-term:
I’m ultra bull, new ATH is imminent imo.

Medium-term:
Big warnings from the market to lock in profits. Still bullish, but way more cautious and warned!

Short-term:
Neutral or slightly bearish – only for local 10-15% correction

HTF 1D:

The daily chart reveals another series of very valuable data aligning with further market warnings. Firstly, it’s due to the market completing full 200-day mean reversion off sub 30k lows, as predicted in my reports and calls from June and July. The mean reversion mechanism works on the trend fading basis where highly deviated price action reverts back to its average – i.e. gets back to “normal”, fair price. If it happens after heavy downside deviation – it’s bullish. When it happens after massive upside move, the market readings are rather exhausted and minor correction may be expected.

Secondly, there are several potential bearish divergence which all should be read more as a big market warning rather than a definite reversal signal. I’m referring here to the momentum divergence vs the price action – Lower Highs on Momentum vs Higher Highs on price action. There’s another bearish divergence to be found in the chart – ATR (volatility range) declines vs Price Action advances. It suggests that the trend weakens the higher it goes. Every next consolidation or corrective movement after massive rally up bears the risk of THE correction (the reversal)

From the price action and chart pattern analysis standpoints, the market is consolidating under the resistance (February-May H&S neckline) is rather bullish yet currently I find more warnings than perfect, clear bullishness for short-term.

HTF 12H:

The middaily chart is less and less likable to me personally for the short term price action and it puts bulls at short-term risk. It’s due to the fact that there’s clear weakness of trend in an inability to sustain trading over the trendline. This gives me feedback from market that trend is not sustainable and it’s getting more and more wobbly, uncertain about the short-term trend directions. As long as BTCUSD trades below the trendline, Im leaning short-term bearish i.e. took a couple of “advantage points” from bulls and added to the “bears’ account”.

It’s mixed signals. On one hand it’s still an uptrend by Dow Theory until it breaks down 46k: higher highs with higher lows. The uptrend is getting weaker here for sure, which may also change at any time. Still, it’s always better to NOT fight the trend and follow the trend rather than counter trade it trying to pinpoint the top. For this reason, I do NOT recommend short selling (not to mentioned leverage…). Instead, I recommend exactly what the market is saying and It’s shouting more and more loudly “TAKE SOME PROFITS!”

The bullish crossover of aVWAPs (orange means) suggests that longer term direction is upwards. It tells me then, that the potential short-term retracement should rather be short-lived, quick and of buy-the-dip opportunity.

Volume-based trends suggest that the fair MTF price of bitcoin is somewhere between 41727 and 42353. I consider that a support zone hence, worth setting some bids in there just in case.

MTF 4H:

For the better context understanding, let me quote my most recent 4h chart review below JIYMI:

“MTF chart analyzed from the perspective of volume profiles shows decent confluence through all the recent major swings. One may conclude that the most essential local zones are:

SUPPLY ZONE: 49.1-49.7k
DEMAND ZONE: 46.6-47k
MA200: 44.3k

The longer BTCUSD resists to push through and reclaim the supply zone 49.1-49.7k, the higher the chances are for bitcoin to revisit demand zone 46.6-47k and hence fail the “bull flag” pattern with a fake breakout on top once MA50 (orange average) is lost with ugly close below, back inside the flag pattern. This would eventually lead to the retest of MA200 44.3k with potential overthrow to 42-43k with long-legged capitulation candle (e.g. hammer).

As the trend is still upwards (although weakening), it always makes better sense to anticipate trend continuation rather than fade the trend in search of shorting perfect top or longing perfect bottom (impossible). Because the trend is getting weaker, and the “bull flag” pattern is printed, there’s clear condition that has to be met by bulls in order to squeeze shorts and shoot straight up to 53k. Conditions are as follows:

BULLISH CONDITION: Daily/Weekly close over supply zone 49.1-49.7k -> leads to 53k.
BEARISH CONDITION: Daily/Weekly close below demand zone 46.6-47k -> leads to 44.3k

I make sure to put the “bull flag” in quotes as the pattern itself resembles a bull flag. For the chart patterns though, what matters more than a pattern shape alone is the pattern’s context. The classical reliable bull flags occur in a fresh uptrend which is just starting the rally rather than occur after 70% upside push like BTC is showing. The bull flag pattern is a typical continuation pattern. In this specific context, this “bull flag” pattern is a part of slow pacing, lowered-momentum uptrend, which has already started getting wobbly. For this reason, it is NOT the most reliable pattern you could get and accounting the market context that the pattern occurs after +70% upside push is rather a sign of weakness to me. With all that, no confirmation to either case means little reliability and low certainty as a result. If this “bull flag” fails and BTCUSD prints ugly candle closed back inside the pattern, this shows distribution and likely gets us closer to 44.3k scenario. If the ongoing “flag” breakout holds well and the bullish condition mentioned in the section above is met, then this gets us closer to 53k.

In other words, it’s looking good in here, but I’m very suspicious and cautious as the goodness is not of high reliability. It just “looks” good but what’s happening behind the scenes (market context) shows that it can reverse likely at any second pulling bitcoin down to 44.3k.

In conclusion, it’s worth collecting more profits here as it bears the risk of local reversal. Nobody’s ever gone broke from taking profits.”

UPDATE: All quoted above stands 100% valid. BTCUSD has been confirming the supply zone 49.1-49.7k with increasing chances of the “bull flag” collapsing with a fakeout, the longer it doesn’t give a solid bounce over the pattern. When the price action resists to push through for too long, it means there’s not enough buying power which puts bitcoin at risk of local retracement with sudden 2-3k usd candle out of nowhere. What’s changed is the MA200 value as it’s moved up from 44.3k to 45k at this moment.

NUPL

Currently the ratio is at 0.578 which adds little change to the most recent NUPL analysis. Still no clear bearish divergence indciating the crowds were more active on the profit realization side. Instead, the price action and NUPL trend in the same directions with the same tendencies, which not always is the case (compare with the top bearish divergence PA vs NUPL during February-May period)

The fact that NUPL indicates the belief zone, it definitely is a decent day to take some profits off the table as long as we trade over 48k with good risk/reward.

NUPL tendencies unveil the crowds tendencies too. As it can be read as the market sentiment indicator as well, it clearly reveals that the crowds’ certainty has been increasing in past weeks. One should NOT fight the trend the same way they shouldnt swim against the river stream. if you’re lucky, for the short-term you’re going to be fine. Eventually, how many times in a row series can you get lucky about the same thing? Not many at all. Dont fight the trend. Rather take some profits.

FEAR/GREED INDEX

The indicator values the crowd certainty at high greed levels at 73 out of 100. It’s then at the edge between the greed and extreme greed. Crowds are always right in the middle of a trend, but always wrong at the extremes. The closer to the extreme side, the wronger the crowd gets. For this reason, it’s yet another tip supporting the thesis that it’s worth to take some profits off the table as long as we trade ~48k. While tracking recent Santiment updates on twitter and my twitter audience sentiment (approx. 350k followers) I can tell there’s lack of overall understanding where bitcoin is going.

It’s rather that people have been getting more and more clueless in past days. Because the trend is up, and people have started disbelieving that bitcoin continues towards 53-58k, imo traders should follow the trend which is upwards and keep their heads/sight up to mid 50000s regions until proven wrong by the market. In conclusion, it’s safer to bet for mid 50000s but keep preparing for potential 42000s retest, which is less confirmed but more and more likely. Nobody’s ever gone broke for taking profits, taking warnings. Paying for your mistakes in trading can rather get very expensive at times. Therefore, for those concerned – we’re almost done with the time-limited discounted coupons for our premium memberships. We’ve already closed two rounds of discount coupons out of three. The last one is closing irreversibly in next hours. If interested to learn how to recover your losses faster, avoid the pain of being new/inexperienced in the market with expensive mistakes, want to improve your own trades and grow as independent trader while needing someone in the field you can rely on 24/7, then rush to claim your discounted tickets before they expire with no going back. Go for the link below as it runs out of time.