Daily Report – Bitcoin and Market Update (January 6 2021)
Middaily showing 37k as the resistance after insane volatility unseen before at such microlevels. BTCUSD is pushing through new ATH, despite riots emerging under US Capitol. Recent day’s volatility and extremely choppy area is probably the hardest one to figure out. No reference point here other than prior day price action. Trading in price discovery is extremely difficult most of the time. Currently we are experiencing probably the biggest nominal volatility per price in history. Volatility means risk. For this reason all BTC traders are exposed to very big risk. Insane amount of whispaws and fake breakouts on daily basis. Few massive dumps out of nowhere in few recent days. Especially in January/February, any bigger retracement can initiate massive selloff triggering bigger correction. The move is obviously heavily over extended (doesn’t mean it cant go higher though), which is additional reason to stay alerted all the time and keep the caution. The truth is that nobody knows where it’s going to stop now. One can guess or produce approximate targets using Fibonacci extensions. BirbicatorPRO, based on volatility measures, suggests that the next resistance is 40.7k, 45k, 46.7k, 50k. It’s definitely worth to take partial profits after every major movement like 10-15% rallies for BTC. #1 rule of making big money is not losing it in the first place. I trade 6 figs so every big mistake costs me tens of thousands $. I always choose capital preservation as priority. My friend BigCheds once said “Treat your money right or it will find a new owner”. And he’s right.
MTC picture hides insane intraday whipsaws, which are not to be seen with 4h chart. Current 5min range often provides 500$ moves (sick!!!). With this volatility and pace of trend changes, this makes it quite a nice playground for the scalpers yet extremely hard to position yourself for few days/weeks. The 1.7-2k daily ranges cause the issue that setting stops is also extremely difficult as wide range needs to set stop loss below the range lows (also often trapped and front-run) which is far away from market price. The 30-33k blow-off top concept fulfilled only small extent in extreme urge and volatility. We saw the largest ever selloff candle on a smaller timeframe equal to 6000$ for -20%, which is between 15% and 30% typical retracements. It was rather a flash crash, which happened after another 3k straight market selling. One thing Is certain. Big (200M+) money player cashed at that time, which caused the market to collapse for a short time. If whales take profits here, it means they choose to derisk some part of their profits. And so should we. The entire bull market, of course, is nowhere near the top imo. We’re entering the most aggressive part of the trend, corrections included. Apparently we will see much more aggressive and flash-crash-type retracements rather than slower ones forming for months. 1-3 weeks would already be considered “longer” correction. Fib extensions point out next potential targets (assuming no serious invalidation and no topping out with fakeout, blow off top or another 6k flash crash candle). Those are: 42.2k at 1.618 golden ratio extension and then 51177 as the next extension of 2.618 Fib. Those are in play as long as we close bigger candles (4h, 12h, 1d) above the broken resistances rather than faking all of them often. Lots of fakeouts acts as a hand brake for the market in a way. So while enjoying the rally up, do not forget to secure your positions with SLs.