Daily Report – Bitcoin and Market Update (December 15 2021)
The middaily chart is showing sideways movement at the bottom end of the medium-term downwards trend in the line chart. The line chart shows smoothed price action as it includes only the close price rather than OHLC data from candlesticks. At times of enhanced noise and little to no direction of the market it’s worth occasionally tuning in for the line chart to get the perspective.
Local sideways is flirting with 50-week average. It’s not showing too much of strength so far as BTCUSD sinks in the extreme fear sentiment for the past days. Deep retracements combined with extreme fear have usually been of decent buying opportunity according to the historical records and statistics.
Volume based trendlines (orange curves) are proving that long-term reference price, fair value of bitcoin based on price and volume anchored at July’s lows is 50647. Based on the mean reversion and nature of market oscillations, it is where bitcoin should be trading at. Any price action happening beneath this level is usually a good long-term buying opportunity.
Short-term aVWAP resistance is at 54812, while local support anchored at 42k lows is at 48653. Those levels can serve as an arbitrary level to decide that above the aVWAP bitcoin is short-term over priced and below aVWAP bitcoin is short-term under priced.
Bitcoin should be back on the bullish side of the correction once it breaks and closes a strong day/week above 54812 level.
Fibonacci retracement levels are placing the local sideways PTSD range between 50% and 61.8% Fibonacci levels, usually marking out decent buying opportunities for short and medium-term corrections.
In case today’s FOMC meeting of the FED representatives for the inflationary press release disturbs the markets, it is even possible BTCUSD may see a rapid flash crash down to 78.6% retracement level of 37402. Although, without strong bearish FUD factors which are unpredictable (you can’t really guess what Powell or other representatives will say) I don’t think it’s likely at all to see bitcoin trading there. Exogenous factor as sell-the-news could only trigger that and just like any other news event it will have nothing to do with technical analysis.
Nonetheless, that is something you should be prepared for and something that any trader has signed up for by being exposed to bitcoin at all.
MTF picture has got the new BirbicatorPRO layers applied with the new Baseline and the new Momentum Bands based on volatility.
After the bear signal flashed around 62k USD mid November, it remains under the impact of the bearish trend with no signs of clean or perfect reversal just yet. As long as it trades between the Momentum Bands with the base support at 44k USD and local resistance at 51.3k USD, it should continue its choppy sideways with no clear direction. No direction means more fake movements, fake breakouts, fake pumps and fake dumps as the main narrative suggests no consequent continuation in either direction.
One may notice that only after successful breakout and close above the upper Momentum Band of 51.3k USD, short-term bulls are back in control. Until that happens, the bulls are at risk and BTCUSD may tag the volatility lows of 44k USD. After successful breakout above, the next BPRO based levels are given at 53110-53587, 59616 and 62742 as the consecutive resistance levels.
Today’s FOMC meeting may result in tagging extreme levels of volatility per the Momentum Bands. It’s virtually impossible to guess how the global markets will react to what FOMC representatives announce with regards to inflation. What’s expected, though, is enhanced volatility (and risk) and higher chances of the market flash dumping to 44-45.4k USD support or 50-51.4k USD resistance. By attempting to guess, the odds are 50/50 that you are right or wrong and any times that the odds are against your winning or close to random, it’s suggested not to take any additional risks, positions, guesses for the vast majority of market participants, unless they are insiders.
The hourly chart with the new BPRO applied shows that currently BTCUSD is tagging right at the oversold volatility bands in the context of larger PTSD range with no direction.
Local Momentum Bands analysis suggests that the most likely zone for bitcoin to trade within is 46.6-49.6k USD. Knowing the context of the 4h chart analysis, it may suggest that in case BTCUSD sees a powerful breakout through the lower hourly band it may drag the bitcoin’s price lower to the 4h based levels of 44k USD. In case of an upside breakout through the upper hourly Momentum Band, it brings high chances of continuing the movement towards 50-51.4k USD.
Range trading strategies (apply for 1h and 4h ranges based on Momentum Bands too) are as follows:
- Inside Range Trading – buy range lows, sell range highs
- Outside Range Trading – buy upside breakout (retest), sell downside breakout (retest)
- Do not trade the range at all – wait for the trend to come back.
The index hand is pointing at 28 points on the scale which stands for the fear sentiment on the market. As seen on the second chart, historically any time that bitcoin’s fear/greed index tanked into fear/extreme fear area it stayed there for a while and was associated with heavy accumulation rather than selling. Right after those periods of extremely bearish sentiment the market pulled back rapidly to the opposite end of extreme greed.
The crowds are usually right in the middle of trends, but they are usually wrong at the extremes and about guessing the market inflections. If no exogenous FUD factor brings in global instability for financial markets (which FOMC may do for a moment), it should be soon obvious in the hindsight that current levels of ranging market after 40% retracement were of decent buying opportunity and regrets for not taking it.
Fear/greed index is NOT a timing indicator. It means it’s not supposed to let you pinpoint the top or a bottom on the market. Instead, it shows when the market is considered to be “cheap” or “expensive”. Based on the readings, once may conclude that the market is cheap at this time.
More details explained in the video report. New BPRO release is coming in next two-three days (depending on the time zone). It’s mind-blowing how much simplified it’s become and how much time it saves. Invaluable upgrade that we’d been working on for many months. It’s right around the corner. Stay tuned with our free newsletter for additional perks over the new BPRO.