Daily Report – Bitcoin and Market Update (July 6 2022)
The middaily chart continues its local chop with intraday volatility contraction, locally.
The Bitcoin prices seem to oscillate within a narrow range-bound movement at 18.5-20.8k USD.
Having built somewhat of a support zone with the BWAP block at 19.4-20k USD, backed by volume, for as long as the prices remain above the block, the short-term bulls are more likely to continue to push upwards. However, there is a limitation to that.
Such a limitation comes from the CTF Trailer Stop at $21795. As long as BTC trades below that threshold, the bears remain in control and have the upper vote in the market.
The MTF chart maintains the sideways trajectory for Bitcoin prices.
The continued chop has flipped back to the bullish note, after maintaining the CTF Trailer Stop at 19481 USD. As long as this level is defended, the short-term bulls have the upper hand. Yet, the non trending environment causes a lot of noise and triggers fake signals. One should practice caution while utilizing trend strategies as long as the sideways pattern develops.
Price action wise, the failures to break above the 21000 USD resistance commit to the mean-reverting movements and promote range trading strategies (buy low, sell high). Any fake signal following a breakout failure tends to perform better in the opposite direction than the one anticipated just on the breakout direction itself. As such, a failed top breakout empowers the sell-off, whereas a failed bottom break accelerates the rally to the upside.
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 bulls have failed to break above the top, resulting in a reversal line at 20800 USD.
Combined with the BPRO divergence 91% strong, this lays out a potential scenario for a short-term range lows retest for the sideways pattern.
If that comes true, then one of the price objectives may be the 18500 USD region. However, one should stay mindful about the empirical proof that the fake top breakouts tend to decline faster and stronger to the downside. For this reason, it is worth being ready for the BTC price action to slip below the range lows, at least for the short-term.
The condition is, however, that the BTC bulls fail to break above the 21000 USD on the daily basis.
Having spent a few weeks in the capitulation territory, BTC prices continue to generate extreme fear in the market.
There has been a slight sentiment improvement, however, as the index hand has reached 18 points on the scale.
Historically speaking, the more the underinformed herds express their pessimism and fear toward an investment, the more likely the investment is to be profitable over the following weeks and months.
While this is not a timing indicator, it may still provide contrarian based, and valuable information about whether buying or selling may yield better results.
The downside potential has not expired just yet, based on the cyclical troughs at 80-90% drawdowns (now -75% off the highs). Still, contrarians may find current prices relatively attractive.
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Hope it helps. God bless.