Daily Report – Bitcoin and Market Update (December 21 2020)
Weekly timeframe presented traders with beautiful long-term confirmation of closing through ATH level. It means the old highest supply area is now turned into short-term demand and whenever prices return to those levels, buying back those levels should be profitable in the short term scale. Adding BTC to long term holdings at current levels is inappropriate to say at least. Time to add to long term buy and hold strategy was below 10k which was quoted with disbelief of masses. You accumulate during accumulation period after massive declines rather than at new ATH levels. It’s against principial rules, so technically speaking, the only options left to trade BTC successfully are low timeframe and suggestedly medium timeframe. Notice strongly overbought momentum that pushed prices from 10k levels to 24k+ for 140% ROI swing. Corrections are inevitable, yet in bubbles that are being inflated, like the one currently, will characterize with very sharp and violent retracements. Sudden 3-5k drops may become quite regular as we proceed higher. Overall targets for now are 25k, 30k, 40k, 45k. Yet it is unquestionable that MTF correction is inevitable. Seasonality of bitcoin suggests we should expect bigger throwback to test lower breakout levels during January-February period, when sentiment will decrease sharply and people will assume bull market will have ended. After such 30-40% correction, that’s time to load up big for those that kept missing out since 11k. It will also be noted in the momentum decline below overbought area.
Daily spinning top with a new high turned out to be a technical swing failure and was followed by a news-driven shake-out dump of 2.2k range (24k->21.8k). This makes it potential further downside decline as long as we are not closing daily sessions above 24.2k. Old ATH at 20k is now turned into support zone: 18.2k-20k. Any prices seen inside this demand cluster are considered short-term buying opportunity. Demand cluster comes from: Price Action (ATH high, polarity flip, VWAP, MA50, CME gap 18.2-19k, VPVR volume spike, common sense of a technical trader. Correction bias invalidation comes with daily close through the supply of 24k.
Middaily session analysis based on CME futures for BTCUSD clearly show there is clean supply between 22.7k and 24.2k. Range breakout target of consolidation 16-20k was also perfectly tapped so if BTCUSD is to correct anywhere, it would rather be here. Correction here would feel natural and very technical with high chances of filling CME gap inside 18.2-19.1k zone. If we get those levels, I will buy heavily into that zone. Does it mean bull market is finished? Of course not. It is one of many violent and volatile corrections that will become normal and common from now on. Note that as BTCUSD proceeds to grow, the same % change will bring bigger $ movements. E.g. 10% downside from 20k is 2k decline, yet 10% throwback from 50k will be 5k. It means volatility and hence risk will increase over the time from now on. It also means, the gaps will be more probable to get filled as gaps are filled only dependent on the volatility and timeframe it takes to accomplish certain level of volatility.
4H picture is showing a lot of distributive nature movements intraday. 2k decline within a few quarters is rather a violent move of big money involved. Some whales on the DXY strengthening, decided to get out, which combined with the natural reaction to dump for an asset paired with USD. Solid support is located at 21.5k because of combination of MA50 and VWAP of the most recent ATH swing. As long as we keep closing candles below 24k, the consolidation is considered local distribution.
Hourly timeframe shows very clean consolidation – distribution. It looks practically perfect when compared with Wyckoff Distribution model of sideways movement. Typical swing failure on top: new high made yet with rejection to close through the resistance after price increase. One can consider that pattern a Head & Shoulders ranging from 23.1k up to 24.2k. Hence 1k range approximately, which was met already with the downside target at 21.8k. Invalidation of the distribution comes with closing series of 3 strong upside candles INSIDE the range, best – above MA50. Current resistance area is 23-23.2k, then 23.5k for MA50, then 24-24.2k as range highs area. When area that showed weakness, starts showing strength and BTCUSD reclaims the highs with daily close through 24.2k supply, then rally is continued towards 25k, 27.5k, 30k. Until that happens, BTCUSD is on the intraday bearish side of trend biased more towards 21.5k support retest (MA200). Other than that, in 3 days from now we’re starting FINAL CELEBRATION, ultimate party of 2020 in The Nest. Christmas + 3rd anniversary. Massive discounts, big presents coming. 3. Days. From. Now. Number of discounted seats will be limited. To take part and support, please Like RT this tweet below.