Daily Report – Bitcoin and Market Update (January 23 2023)

HTF 1W:

The weekly BTCUSD chart suggests a mean reversion toward the conjunction point of the 50-week mean and the 200-week average.

Hence, the 24.7k-25.6k USD can work as resistance, as traders will use these reference anchors to frame their minds. Then, because the prices reflect the investors’ expectations of what the future holds, the prices can gravitate toward the said anchors.

The descending triangle pattern targeting $12000 has been invalidated, as the failed breakdown pattern was confirmed with breaking back above 17.5k USD following the 15.5k USD bottom. Failed patterns perform better in the opposite directions than anticipated based on the initial breakout directions.

Furthermore, the 7-week correlation coefficient at 0.97 provides a strong relationship and cross-dependence of BTC on the $SPX. Therefore, BTC is likely to follow any directions taken by large-cap stocks.

While the short-term fluctuations can’t be eliminated, the long-term price history since June 2010 reveals a reliable chart pattern where every decisive breakout to the upside following a declining 200-day trend of the primary bear run initiated a new bull run.

Traders should consider the fact that there is little sample within the short price of the history of Bitcoin. However, ignoring a 100% reliability of such a chart pattern may not be the smartest choice.

HTF 1D:

The daily chart of Bitcoin paints a picture of a confirmed upward breakout across several validation paths: price resistance, percentage distance traveled, volatility, and time.

The 200-day trend represents the ex-bear market line of reference. After a year-long decline, the trend has finally started to ascend slightly. As it may extend flatly over the following months, the initial phase of the new bull market may prove slower price action, oscillating around the 200-day mean.

Price action suggests that a significant resistance area can be expected around $25000 (August 2022 highs). This round number also matches the weekly resistance cluster based on moving averages.

In addition, Bitcoin is trading well above the primary trend line for the first time in over a year. It’s a strong reversal signal informing that the market has transformed internally as the demand & supply forces have turned around.

HTF 12H:

The middaily chart reveals that Bitcoin is struggling to break above $23000 with a confirmation, locally. The first successful break above this critical level may prove that the advantage is on the bullish side.

The HTF Trailer continues to display a flat support line at $21937. If this level is defended in the price chart, the bulls will maintain control over the market, paving the way for a continued ascend. It’s worth noting that even if Bitcoin drops below the said support level yet manages to climb back above the broken support within the same session, the breakout will not be valid.

Besides, the Level Lines define the following support levels of interest:

$21547
$18795
$16522

These levels often work on a level-to-level basis. It means that when the price travels through the first level, it may further gravitate toward the underlying Level Line, and so on.

MTF 4H:

The MTF outlook suggests a horizontal price action as BTC consolidates within a tight price range – mainly below the $23000 resistance line.

Marking the highs of the swing at $23500 with a failed breakout pattern, Bitcoin may move more to the downside in a short-term manner.

Price action implies a potential support area at $21650 and suggests that, in case of a break below the HTF Trailer Support of $21937, this level could provide a line of demand for a bounce.

Otherwise, a successful break above $23000 could fuel a further rally.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

The NUPL ratio is valued at 0.133 and suggests that there is a net unrealised profit for some traders, after bottoming out at -0.31 on November 9th 2022.

It confirms the price movements as both travel in the same directions.

The longer the NUPL ratio stays above the 0-line, the more probable the assumption about the bear market bottom, and a new bull market start.

Fear And Greed Index

At 50 points on the scale, the fear and greed index remains in the neutral mode.

Traders will often suffer from different types of behavioral biases. Some of them include loss aversion bias, fear of missing out, representativeness bias, misinterpretation bias, regret bias, recency bias, or hindsight bias. In aggregation, they may empower new emerging trends to continue. Hence, the present sentiment can be associated with traders starting to realize, that they might have missed out on the market bottom. It will encourage them to rush and make many erros while executing trades.

Even though the market looks promisingly better now, the Fed is running difficult operations to ensure “soft landing” preventing from a recession, which seems fairly unlikely at the moment. The headwinds may be present in the upcoming winds and months – especially, that Bitcoin is soon stepping in the February’s seasonal pattern which often is proven bearish.

Cuation is recommended.

Hope it helps. God bless.

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