Daily Report – Bitcoin and Market Update (January 3 2022)
Weekly chart continues within the 2021 range bound. The last week candle closed slightly beneath the 50-week average, which in theory is a bearish symptom on itself. Although, the distance from the close to the mean is around 2.3%, which is rather a marginal percentage and not reliable as such, in my opinion. For further short-term declines, I’d like to see bitcoin close a week at least 5% beneath the average.
Price action wise, BTCUSD is trading between 50% and 61.8% retracement off its highs 69000 USD. Based on the Fibonacci retracements BTCUSD has supports at 44156, 37402, while price action suggests a demand zone derived from September 21’ lows at 39600-43178 USD.
As mentioned in my latest report, as long as BTC trades within the range bound, it has technically the same chances of swinging down to the range lows and range highs. It is only the breakout direction which defines the trend breakout and credible signal.
Weekly close outside the range boundaries is the only indicative signal for the long-term perspective and long-term trend implications. A trading range by definition means the market is lacking the momentum and any specific direction.
Daily chart flashed another pivot indication which may suggest a local bounce. I would take it with a grain of salt as long as BTCUSD trades beneath its BaseLine and BWAP block.
Momentum Bands suggest that bitcoin will most likely trade between 42000 USD and 56000 USD with the highest aggregation of trading between 44.2k-53.8k USD
BWAP block (46.9-47.6k USD) is a volume-weighted average zone which shows an area acting as supply (when price trades below) or demand (when price trades above). Because it is very near to the BaseLine at 48100 USD, the BaseLine combined with the BWAP block create one cluster of resistances. In other words, bitcoin remains under the bearish impact within the range until it closes through 48100 USD.
CTF Trailer Stop at 53782 USD is the level which defines a daily bearish scenario validity. A daily close through this level officially reverses any corrective impact coming off 69k USD highs.
Middaily candles keep closing within a very narrow range (inside a larger range) defined between 45.6-48.6k USD, right beneath the BaseLine average.
CTF Trailer Stop at 49803 USD is invalidation level for the middaily correction and serves as an early confirmation for the said daily CTF Trailer level.
Candlesticks remain black-colored expressing “bearish bias”.
BWAP block combined with the BaseLine given and output zone at 46.8-47.5k USD defining local resistance zone. A middaily close through to the upside sets BTCUSD technically for the retest if 49803 USD. A successful ugly close beneath 45.5k USD may suggest liquidity hunting within 42-45k USD zone – chances to revisit the range lows.
MTF chart shows the biggest significance for bitcoin range zone defined as 45k-49.5k USD, based on the Momentum Bands. It aligns well with CTF Trailer stop at 48821 USD.
BTCUSD also finds BWAP block at 46.7-47.2k USD. As long as bitcoin trades below, it is more likely to tag the test the volatility lows at 45k USD. When it breaks above and closes through, the price is more likely to touch 49.5k USD.
Basically, it is a range (45-49.4k USD) inside a larger range (42-52k USD), inside even larger range (30-69k USD). It is what we call a fractal nature of the price movements. At the same time, it implies that there’s “triple indecision”, just to help you picture the state of nothingness and neutrality bitcoin is in right now.
The hourly chart shows pretty much complete randomness of movements on the short-term basis. Bitcoin swings back and forth, up and down, within a narrow boundaries without a clear direction. It is exceptionally difficult environment for traders.
BPRO suggests that a short-term bearish movement is in tact until CTF Trailer Stop at 47216 USD is breached.
BPRO Level Lines show supports as follows:
BPRO Level Lines show resistances as follows:
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: Mean Hash Rate (168h Moving Average)
Hash Rate averages to the historical highs in a clear upwards trend ever since bottoming out in June-July 2021.
Because it is defined as “The average estimated number of hashes per second produced by the miners in the network”, it means that miners are the most engaged ever in mining bitcoin. It is a bullish tendency on the onchain side.
As bitcoin price tends to decline or moves sideways while the hash rate increases, it is fundamentally positive “divergence”
Overall, a good sign of health of the network behind the scenes.
Here’s what I wrote in the last report:
“2022 opened in the sentiment of extreme fear! The index shows 21 points on the scale and is potentially promising for the first weeks of 2022.
As mentioned on my latest webinar, every year in the past 7 years of bitcoin’s history, has been followed by at least a short-term upwards trend, bounce or relief rally. It aligns with the extreme fear thesis.
Historically, extreme fear provides better buying opportunity than it does for selling.
The crowds are usually right in the middle of trends and usually wrong at the extremes.
Any time in the last 365 days bitcoin hit the sentiment of extreme fear around 20 points on the scale, it was soon followed by an upwards price action.
That said, it is not a timing indicator. It does not suggest that the market is to bounce instantly. Instead, it tells when the market is “cheap” or “expensive” based on the sentiment and historical records. For now, bitcoin seems to be cheap indeed.
UPDATE: All above mentioned is practically valid with the only difference that for now fear is marked with 29 points on the sentiment scale. As long as bitcoin trades within the described ranges, the sentiment would follow accordingly. Hence, not much change in the sentiment is expected overall. It’s also 13th onchain birthday for bitcoin – 13 anniversary of the Genesis Block. Worth marking the date in your calendars!