Daily Report – Bitcoin and Market Update (July 13 2022)
The middaily chart continues to chop around a mid-range level of 19000 USD.
Following today’s 9.1% CPI YoY June readings, the risk-on markets have reacted sharply to the downside.
The CTF Trailer has adjusted the breakout threshold downwards to the 21118 USD level. For now, this is the main breakout level that needs to be reclaimed by the bulls, in order to recover the control over the rmarket.
Until that happens, BTC is under the bearish pressure and the bears hold the upper hand.
The MTF chart displays an invalidated trend line support at 19500 USD, following the CPI news breakdown.
Broken patterns tend to perform stronger in the opposite direction than anticipated just on the breakout itself. That means, that the broken trend line is rather anticipated to indicate more selling pressures in the near future.
Furthermore, relevant support levels rest at $18985 (19000 USD) and $17104 as given by the BPRO. At the same time, the BPRO Level Lines define resistances at following anchors:
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
The short-term price action gives a closer look into the failed trend line pattern.
The failed breakout typically gets a more violent breakdown, which was additionally triggered by the exogenous price shock from the CPI prints.
Price action wise, the previous support areas indicate technical anchors at $18595, and $17592. Fairly close proximity of those levels may suggest forming a support cluster within the region defined by those boundaries.
A clean break below the upper support may indicate further cascade of sell-offs and following a retest of the range lows for the consolidation pattern, at 70-75% drawdown off the peak.
Short-term traders would rely on the volatility derived from the macroeconomic readings today, and tomorrow for the jobless claims. Both event trading days may increase volatility, and risk, resulting in losses.
At 15 points on the scale, the extreme pessimism saga continues.
It will soon have been a full month since BTC entered the depths of the capitulation stage, which does not seem to be confirmed complete just yet.
Typically, there has been 80-90% drawdown off the peaks, to put in the cyclical trough in the price action.
If history is of any lesson, then more pain may be expected, along with the sentiment deterioration.
As behavioral finance learns, the underinformed herds are always wrong at the extremes. This may come out as a brutal claim. However, the practice proves it is correct.
Contrarians may use this approach to scale in with the purchases, when there is “blood in the streets”. Buying into extreme fear has historically yielded better returns than selling into it.
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