Daily Report – Bitcoin and Market Update (February 9 2022)
The middaily chart shows a local sideways sequence displayed in the form of several candlesticks lining around a horizontal level of 44000 USD. This may have far-fetched consequences.
The short-term sideways movement is trading right at the BWAP block zone and right above a flat support level defined by the price action alone at 43000 USD.
BPRO demand/supply block visualizations provide a clean demand region at 41-42k USD, which would act as the next line of support if 43000 USD fails to hold the price action of bitcoin above it.
CTF Trailer is bullish and upwards-oriented while having a Stop (invalidation) level at 40496 USD. This could be used as a dynamic protective stop level for the MTF swing traders. A failure to close above this level on the 12H chart could imply underlying weakness and further downside correction. In such case, it’s worth monitoring the bitcoin exposure and if a 12H or even better: 1D or 1W close below that level occurs, it’s worth decreasing the exposure or closing out certain medium-term long positions to wait for a more encouraging environment.
The most important line in the sand is defined at 51000 USD by the price action of bitcoin. That level could be expected to work as a magnet for BTCUSD if we are to see a follow-through to the upside.
The MTF chart shows a short-term weakness being the result of failure to close above the breached High Momentum Band. Though, because the displayed is rather a short-term picture, I would expect this to only have short-term implications too.
Firstly, bitcoin is moving in the local horizontal movement between 42.7k USD and 45.5k USD levels after rejecting the upper volatility-based zone. The peak candlestick is equipped with relatively long upper candle shadow which in the context of the average volatility (standard deviation bands) implies a short-term weakness and the selling pressure appear. It did not come out as a surprise, though, because that area was defined as a potential rejection zone in my recent reports.
CTF Trailer has turned bearish and the invalidation level is currently seen at 44830 USD. A strong candle close above this level would invalidate the bearishness and bring back the upper hand to the bullish side.
Until the above mentioned happens, now there is a chance of visiting the lows at the 40.5-41.7k USD zone. Yet, it is not given as certain at all but rather comes from a short-term technical weakness on the demand side. The said support cluster comes from a clean line in the sand at 41.7k USD (orange horizontal line) and the volatility-based demand zone given at 40.5k-41.4k USD. The proximity of those levels create a cluster or a zone, which could be interpreted as a zone with the profitability skewed more towards the buyers than the sellers.
In case unpredictable news or external factors kick in and cause an ugly daily close below 40.5k USD, there is a higher chance of visiting the next orange line support at 36300 USD. Unless that happens, bitcoin remains bullish in the bigger perspective with a short-term weakness.
The hourly chart displays several BPRO indicators grouped, including the Level Lines, BWAP block, CTF Trailer and CTF Trailer Stop along with trend-colored candlesticks.
BTCUSD has shown that the bulls currently are having the upper hand with a CTF Trailer set for the upwards direction. The invalidation Stop is set at 43403 USD and it is a dynamic level – it changes and automatically updates with new trends detected.
BWAP support layer is given for the short-term price action at 43.5-43.8k USD and is working as a local demand zone defined by the candlesticks and volume.
As long as these levels said above are maintained, bitcoin has near targets 46300-46500 USD, with the short-term target of 44895 USD.
The resistances defined by the price action of bitcoin are given as follows:
BPRO Level Lines show supports at:
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”
Bitcoin: Number of Active Addresses (50d Moving Average)
This on-chain metric has shown a somewhat of a slow-down after 3-month decline seen in the 50-day average of Active Addresses. This slow-down relates to the activity decrease and brings potentially promising implications for the medium-term future.
With the price action heading north, it may additionally empower the bitcoin’s active addresses metric and confirm the medium-term reversal to the upside. This would end the 3-month corrective period seen on the on-chain activity, behind the scenes.
A directional alignment between the price action and the on-chain metrics additionally confirm the strength and the momentum of the underlying movements.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
Bitcoin has marked a rapid recovery seen in the NUPL indicator as the metric has bounced from 0.325 ratio to nearly 0.464 quote.
The 33% rally of BTCUSD off the 33000 USD lows is aligned with over 42% bounce on the NUPL side. It implies that the NUPL has grown faster and more than the price action alone. It may imply that the leverage of the market is accelerating, which – if maintained – may shorten the upside potential in the short-term periods ahead.
The strong recovery is overall a positive sign, while the faster growth of the NUPL may result in limitations of the upside growth in the near-term, offering liquidity left on the table to be consumed with market dumps when applicable.
The sentiment index reads 54 points on the scale as of now, marking a neutral territory.
Overall, I take it as a good sign and potentially supportive of the further price appreciation as the crowds are getting continuously more bullish as the price action heads higher.
The crowds are usually right in the middle of trends (which is why you don’t fight the trend) and usually wrong at the extremes (which is why you usually counter trade extremely exhausted movements).
That being said, it seems that this is the first instance, where the momentum is building in favor of the bulls.
As always, more details given in the exclusive video report.
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