Daily Report – Bitcoin and Market Update (January 14 2023)

HTF 1D:

The daily chart has shifted sharply to the upside and is now trading over the 200-day bear market trend. For the first time in over a year, it can be considered a sign of technical strength, not weakness.

There is persistence in going higher, unlocking higher highs and higher lows across the lower time frames, which may lead – at least – to short-term implications and upward momentum.

However, accounting for the significance of the 200-day mean, such a decisive breakout should not be ignored but perceived as a structural change inside the market.

The positive feedback loop and cognitive dissonance with conservatism bias will likely make traders hold on to their underwater shorts until liquidation, which may reinforce the rally even further.

HTF 12H:

The 12H chart printed the bull signal for the buyers at ~16900 USD with the help of the BirbicatorPRO trend system.

Ever since, the rally has been of exceptional strength and sloped vertically to the upside, accelerating the move. Such price behavior is typical for reliable trend breakouts, which come from structural market changes and shifting forces.

The bulls are in control as long as BTC trades and closes sessions over 20077 USD. This level is defined by the CTF Trailer as the invalidation stop-loss, which may slow the bulls down on the way up.

From the trend-following perspective, after an appearance of such a strong trend, even if the bullish position is stopped on the whipsaws below the critical stops, it should be re-entered (even if it’s higher) if the rally continues. This comes from the nature of trends, which are structured to persist in one direction. This persistence generates the best returns for those who move alongside it.

MTF 4H:

BTC is trading at 20800 USD, presently, and below a local supply cluster displayed in the candlestick chart.

The candle formations reveal longer upper shadows, signaling the selling forces at work.

The 21-21.2k USD resistance area matches the previous swing highs zone of November top.

Typically, whenever there is a rapid move up toward the prior resistance region, it will likely meet opposing forces at the price barrier at first. This is the case now.

However, knowing that Bitcoin reveals exceptional trending features occasionally, such vertical rallies should not be counter-traded. Otherwise, it’s as if one were trying to stop a massive truck speeding at 200kmph with their body weight. The impetus of the truck will make it run them over. The momentum or money flowing in one direction of the trend is like the truck.

FEAR & GREED INDEX

At 46 points on the scale, out of 100, there has been a profound change in the market sentiment. It’s risen sharply from the extreme fear depths toward a neutral print.

Typically, the more neutral the sentiment after a violent breakout, the more likely the market is to persist in the direction defined by the breakout itself.

The contrarians who positioned themselves counter the crowd’s fearful sentiment at the lows, are now in heavy profit.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

Definition reminder: “Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap. Assuming that the latest coin movement is the result of a purchase, NUPL indicates the total amount of profit/loss in all the coins represented as a ratio. It could be interpreted as the ratio of investors who are in profit. Values over ‘0’ indicate investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This phase indicates the increasing reason to take profit which leads to an increase in sell pressure.”

The NUPL ratio has turned back positive, signaling a significant shift on the on-chain side. The ratio is valued at approximately 0.012 presently, which suggests that, on average, the market participants are not underwater anymore, and they received a slight unrealised profit.

Hope it helps. God bless.

P.S. If missed my yesterday’s webinar discussing the $BTC breakout before it happened, see the link below.