Daily Report – Bitcoin and Market Update (January 19 2022)

By Cryptobirb

HTF 12H:

The middaily chart has barely showed any progress whatsoever since the latest report. What does that mean?

Well, firstly, we have been moving inside a 5-fold range bound pattern that’s been in the building since early days of 2021. A number of times have traders observed bitcoin move back and forth around 40k USD region with no clear consensus in the price action. It means that the market has been swinging back and forth between the range extremes with more or less strength for bulls and at the other times – for bears. This builds the overall narrative – the lack of trend on the major time frames, which enforce stronger chances for the lack of trend also across the lower time frames.

With that in mind, we can observe the results in the 12H chart too. BTCUSD has been ranging for most of the time in the past weeks and months with minor interruptions (trends) appearing. Locally, bitcoin is trapped inside an intraweek range (41.1-42.7k USD), which is part of a larger range (39.6-44.4k USD), which is part of even a larger range (39.6-52k USD), which is a part of even a larger range (39.6-69k USD), which eventually is a part of the main 2021 range bound (28.8k-69k USD). A single range brings indecision and lack of momentum into the market, not to mention 5-fold range.

BPRO reveals a continuation of a basing process around BWAP block combined with the BaseLine. This implies a local resistance zone at 41.9-42.5k USD. Each successful close above this region brings higher chances of BTCUSD developing an upwards trend. Remember, though, that each trend direction is overwhelmed by the overall indecision narrative. Hence, every trend, trend line, chart pattern, technical indication is of limited reliability. Every signal or trend developed should always be taken with the caution and a grain of salt.

BPRO Momentum Bands suggest that BTCUSD is trading in the middle of nowhere in terms of volatility – the most neutral spot in the current chart. The average volatility is defined between the extremes: 38.5-47.3k USD. It’s hard, if not impossible, to evaluate strong certainty in such sideways market conditions. It’s safer to expect, though, that any successful middaily or daily close above the BaseLine brings higher chances of reaching the upper extreme, whereas any close beneath the BaseLine brings higher chances of reaching the lower extreme.

CTF Trailer Stop at 45629 USD remains the key medium-term invalidation level for a bearish corrective thesis lasting since mid November 2021. Until that happens, the bears are in control.

MTF 4H:

MTF chart displays BTCUSD price action reacting off the CTF Trailer Stop at 41440 USD, which is a key short-term support level in my opinion.

Currently, bitcoin is trading over the BaseLine average, as well as over the BWAP demand block. It seems that the zone 41440-42000 USD is the main short-term base for bitcoin. As long as BTCUSD trades above this zone, the levels to look at are the Level Line resistance levels given as the following suggests [USD]:

52063
49727
45566

A daily close below 41440 brings higher chances of reverting back into 39000s USD region.

LTF 1H:

The hourly chart shows a continued range bound between the local pivotal levels 41.4-42.5k USD. The implications are bearing a lot of indecision within this zone.

A breakout outside either of the extreme levels given above could enhance a short-term tendency developed in the direction of the breakout. A strong hourly breakout and close above 42.5k USD brings some more short-term bullishness, while a close below 41.4k USD could be anticipated to bring short-term bearish suppression. Otherwise, the range and indecision continues.

BPRO Level Lines show updated supports at (USD):

41627

BPRO pivot levels show resistances as follows (USD):

43347
4293
42413

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

As glassnode explains, it stands for the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted.

As mentioned in the latest market report, the on-chain side of the market, in terms of active addresses, remains in tact with the price trends. No signs of a divergence or reversal spotted so far.

While I tend to watch mainly Number of Active Addresses (168h Moving Average), it’s always worth to be able to put it in a larger context with the help of Number of Active Addresses (50d Moving Average) metric. This way one may observe a short-term trend as well as the medium-term trend. A combination of both slopes turning up ahead of the price may be found a potential reversal signal.

FEAR/GREED INDEX

I feel like it has been a hundred times already to comment on yet another day of extreme fear in the market. It seems that the retail side of the market has lost the hope already and is currently disbelieving any upwards momentum is still yet to come. This bearish sentimet has been with us for over a month already.

To wrap this report, let me quote my Monday’s take on the sentiment thesis:

“I’ll repeat myself here, yet extreme fear area historically has usually been of great buying opportunity. Much more of a buying opportunity than it is for selling, at least.

It is not a timing indicator and it does not focus on predicting perfect tops or bottoms. Rather, it suggests when the market is cheap, which seems to be the case at this moment.

Crowds are usually right in the middle of trends, and usually wrong at the extremes.

Hence, unless unpredicted external factors (from outside of the crypto market) arrive to disturb global financial markets, bitcoin seems to be in a bottoming process, regardless it rallies from here or has one more dip coming in.

Despite clear contrarian thesis supporting bulls for the next weeks or months, it is NOT a go-all-in signal and should not be considered such. Risk management is key to profitability over longer period of time.”

I stand by this side today as well.

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