Daily Report – Bitcoin and Market Update (December 29 2021)
HTF 12H:
The middaily chart has broken through BWAP block support turning it into a resistance area for now at 49.1-49.8k USD. Tiny fake breakout through 52k USD followed by a 10% turn-back into the range has added time for bitcoin to spend inside the range bound 42-52k USD.
Momentum Bands spread between 44.7k USD and 54.7k USD and based on the standard deviation it derives a volatility range for bitcoin. By definition, any market action and price swings inside this range are not directional and rather irrelevant from the higher time frame point of view.
Price action wise, the market is not trending until it closes a strong break through the 52000 USD resistance. Until this condition is met, the market is not trending upwards and there’s almost an equal chance of tapping either of the extreme levels – 52k or 42k USD.
HTF Trailer resistance is at 56488 USD and that is crucial level from macro outlook. Locally, the “bearishness” (while inside the range) is maintained until the first successful close through CTF Trailer stop 50151 USD.
MTF 4H:
MTF chart shows supply zone layered at 50.5-51.7k USD region after fading the range high breakout.
BWAP resistance block is set at 48.5k-48.8k USD and it acts as the local reference point and price magnet while looking upwards.
Main support defined at 45869 USD and it’s now fair to expect BTCUSD gets some bidding there.
Price action wise, again, no chart pattern, direction, formation happening inside 42-52k USD range bound is overly credible, reliable. The market is lacking direction and consequence by definition and most of the time any technical breakouts should fade.
The ranging market is full of traps, indecision and worsening sentiment, the longer it takes to unfold.
LTF 1H:
The hourly chart entered a short-term downtrend at breaking through 49700s.
Local BWAP resistance is set at 47.8-48k USD and backed by volume.
Momentum Bands show off that the zone based on standard deviations at 46.7k-49.1k USD area is the most probable to see bitcoin trade in for the next days.
HTF Trailer stop is at 49413 USD, which is the main short-term invalidation level for local bearishness. Until it’s reclaimed with a candle close above, the market is under the impact of bears more than bulls, while still inside a larger range context.
BPRO Level Lines show resistances as follows:
51798
50410
49674
48775
47981
For supports it’s worth to look at 45869 USD, 44.5k USD and range lows of 42k USD.
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”
FEAR/GREED INDEX
The market is back to 27 points on the sentiment scale from yesterday’s 41 points. Quite a turn-back.
Usually, the longer a range bound movement takes to unfold, the more uncertainty, indecision and fear it induces. It’s due to a phenomenon that traders tend to start giving up on their hopes after several fake breakouts and because of saliency perception bias the same traders tend to believe the range movement is going to continue like this forever.
Historically, the fear and extreme fear periods have always been way better buying than selling opportunity. I’ve repeated that number of times while the market has not been overly generous with any direction whatsover for the vast majority of 2021 – surprisingly.
With this sentiment it seems we are likely to continue moving inside 42-52k rectangle box for more days coming up. Because the sentiment is usually worst at the supports and best at the resistances, it might be worth to apply range trading strategies:
- Inside Range Trading – buy range lows, sell range highs
- Outside Range Trading – buy breakout retest, sell breakdown retest
- Do not trade the range at all.
Range bound is mostly about waiting as the market is taking a breath. It’s always worth to utilize this opportunity to learn more about trading from books or trading materials available on our website.
For those who are not around for my tomorrow’s webinar, Happy New Year and Happy Trading in 2022!
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