Daily Report – Bitcoin and Market Update (July 06 2020)
Weekly sessions closed with tiny doji candle marking out one of the least volatile weeks in past months and years. More often than not, such weekly candles bring lots of volatility in the following sessions. As much as low timeframe dojis are of different nature (short-term/intraday consolidation), the HTF dojis most often bring massive movements as they express intra-week compressed price action, tight Bollinger Bands that bring the evidence of an asset getting ready to spring strongly. Past 2 months Price Action has been very typical to sideways movements and while the momentum has been declining in somewhat of defined downtrend, Price remains relatively stable and diverging in a hidden bullish manner. Long-term perspective is still favoring bullish scenario rather than bearish, due to the fact that BTC/USD broke out above long-term bearish trend and have been consolidating after breakout, under the resistance since. Technically speaking, it’s bullish, despite declining momentum, because SMA50 is still held perfectly so far. As mentioned in all of my past reports in recent months, as long as we keep closing above SMA50, shorting is short-lived and I bet my money on upsides more than downsides. As long as bitcoin provides trading above the 50-week average, it’s leaning more towards 10.5k+ targets and new highs. If closed below, then we talk MTF-HTF shorts.
Daily session has been ranging since mid April period which almost makes it 3 months since then. Bottomed out flat action over lows of momentum recently with bullish cross and break over MA shadows filter, while hovering above oversold area, with bullish TK momentum cross (histogram turning positive), pretty much means from the technical point of view, that BTC/USD has been consolidating with lots of bullish potential inside (reminding that weekly scanner remains green, now also green on all timeframes). Daily price action is still trading below SMA50 9400 resistance, which must be broken and reclaimed as support for bulls to continue and add to the local uptrend momentum. ATR (orange dots on top) is still at its lows December 2019/January 2020 like and historically, we more often have seen upside breaks whenever ATR got close to the lows. Only bearishness on daily picture to me, comes with breakdown below SMA100 and SMA200.
Middaily picture (at the moment of writing) already broke out above MA50 resistance. It needs to reclaim SMA100 as a new support to validate the bullish breakout and continue to retest pre-breakdown level of 9571. If broken and daily closes through this level, the next serious resistance is at 10035 and 10500. Momentum is bullish with histogram turned positive (bullish TK momentum crossover). ATR on middaily scale also at lows with average 14-period middaily volatility at 140$, which shows how steady and flat past week was. Stochastic factor of the birbicator oscillator has lots of room to grow to the upside until it reaches overbought area 80-100. MTF bias is still neutral-bullish (not bullish) until it reclaims SMA100 resistance, so technical invalidation is definitely on the table (but much less probable right now) ONLY with daily close below 200-middaily average at 8600. Unless that happens, BTC is still consolidation with increasing bullish potential.
MTF candles are currently testing SMA200 9300-9400 supply zone getting closer to the mentioned pre-breaker level of 9571. Momentum slightly losing steam as it’s entered the overbought zone already. Expecting local consolidation under the resistance and if equity markets remain pushing forward with new highs (MSFT, TESLA, AAPL -all ATH), bitcoin should follow and break to the upside. Local range boundaries are 8830-9800 between the recent high and low. As long as bitcoin trades inside this zone, the market is still lacking a clear confirmed direction on a larger timeframe. Short-term Price Action may be bullish, but it’s not going to be more legitly bullish on MTF scale until we break above 9800. Current candle pattern/formation I would assign to 4h BTC local picture is Elliot’s Running Flat, or double bottom. Breakout target of such is 9850. Invalidation comes with closing the day below 8830.
Short-term picture is clearly trapped inside a wedgy structure, while trading above MA50, 100, 200 levels that now are working as supports. At the moment of writing, BTC/USD is near the diagonal resistance of the wedge with momentum consolidating inside the overbought area. Expecting local throwback towards 9200-9263 that might be a sort of a RISKY long entry for scalpers (remember bitcoin is still lacking any concrete structure/direction on MTF timeframe). Safest long plays come after breakout retest, which gives purely confirmed confluent long setup textbook-wise. Until it breaks out above the falling wedge pattern, it’s still considered consolidation (diagonal/descending) and like any other consolidation, it’s not the most encouraging pattern to trade. LTF traders might wait for 9200-9263 retest before opening any longs (although I don’t consider it safe/confirmed per what I’ve mentioned above). MTF traders should wait for the breakout retest above the falling wedge for safe entries as attached above too. HTF traders are still in long-term long position as SMA200 (1W) keeps growing. Also, if you care to learn superb skills on TA from another pro friend of mine, there’s no way you should ever miss this most recent masterclass on TA and market analysis from our friendly associate, Jake Wujastyk (Trendspider) discussing the markets. It’s super quality compressed knowledge with amazing visuals explained live. See below, leave a thumb sup, comment and remember to subscribe to our official YouTube account.
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