Daily Report – Bitcoin and Market Update (July 18 2022)
The weekly chart has added yet another bar under the 200-week average.
The Bitcoin price is now testing the 200-day mean resistance at 22500 USD, and the bulls may soon get the first confirmation for a break above the resistance. With a successful weekly close through the resistance, the next major price objective may be around 28000-30000 USD. However, as long as the bars keep closing underneath the 22500 USD level, the bears may get an edge with a bearish pennant pattern, which would imply downside continuation into the 10-14k USD area.
The 50-week mean is now at 42117 USD, and this level may be considered a valid long-term resistance, on the way up for BTC.
The correlation coefficient has declined sharply for BTC against the S&P 500 benchmark. Now, at 0.47 ratio, the directional connection between the bitcoin and stock prices has weakened. While it is not a guarantee for any reversal pattern, a decreased correlation ratio may mean less dependence for crypto prices on the stocks. One may rally without the another, and the other way around.
The middaily chart has printed consequent upwards sloping price action of higher highs and higher lows, locally.
While this itself doesn’t guarantee a larger move to the upside, just yet, the CTF Trailer breakout which has just been confirmed adds more odds to the bullish side of the market, at least for the short-term.
The CTF Trailer breakout suggests that the bulls have re-gained the control over the market, and as long as BTC keeps closing sessions above the Stop level at $20623, the upwards trend may develop.
Potential price objectives point towards 280000-30000 USD regions.
The MTF chart has seen a minor break above the High Band, of the BPRO.
The volatility breakout is not yet fully confirmed, until a daily session closes through 22700 USD resistance.
Moreover, until the breakout is confirmed and additionally validated by the said volatility trigger, the chances increase for a mean-reverting move to the downside, provided that there is a breakout failure – rejection at 22700 USD.
The BPRO Momentum Bands imply that an expected volatility range for BTC is at 19700-22700 USD. Until an either side breakout comes through, Bitcoin prices may oscillate within the range.
Furthermore, relevant support levels rest at $21440, $18985 (19000 USD) and $17104 as given by the BPRO. At the same time, the BPRO Level Lines define resistance at $28588 ($28600).
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, hourly chart displays a potential swing high and a top pattern followed by a reversal.
A mean-reverting move to the downside seems favored by the short-term traders, after the swing high bar has been formed at 22800 USD resistance.
The 22500 USD resistance has been overthrown by the bulls, which commits to the short-term breakout failure. This is a failed pattern example, and failed patterns typically perform better in the opposite direction than the regular breakouts.
While the short-term patterns come with short-term implications only, a larger failure may be confirmed if a daily closes below the 21664 USD support.
Overall, an upwards trend has followed through nicely, so far. However, the top breakout failure adds to the odds for the short-term downside development.
The fear saga continues, as sentiment maintains 20 points at the index scale, out of 100.
Still, it is classified under the category of extreme fear.
For this reason, and the fact that underinformed herds are always wrong at the extremes due to emotional and cognitive biases, the contrarian investors may benefit from a longer-term mean reversion to the upside.
Furthermore, most of the cryptos bottom out at 70-90% drawdowns off the peaks. Having a glance at the 2022 performance chart for the top market capitalization coins, many of them have retraceed into such depths of the bear market, which favors the odds for, at least, a short, or medium-term bear market rally.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
The NUPL at -0.05 ratio value also supports the concept of market capitulation, based on the historical on-chain readings.
While the history doesn’t repeat, it often rhymes.
Historically, buying into extreme fear, as well as on-chain capitulation events have yielded positive and strong returns for the blood-buyers.
It may not come immediately, but the patience pays off for those who take action when the majority fears.
I’ve discussed even more in today’s premium video report, available in full only to the exclusive subscribers.
Hope it helps. God bless!
P.S. If want in on a discounted seat, claim your special -20% discount with crypto with the link below.