Daily Report – Bitcoin and Market Update (June 25 2022)

HTF 12H:

The middaily chart seems to be adding more and more orange-colored bars, which according to the BPRO may be considered more bullish than not, and building an overall promising setup. There is a catch to it, however.

The catch is that the middaily CTF Trailer remains still on the “bearish” side, which lets bulls maintain the control over the rmarket. The CTF Trailer breakout threshold rests at $23141 and plays the role of critical resistance. A proper break above the level with a daily or weekly close through it validates a trend reversal to the upside.

Until that happens, the bears have the upper vote in the market. This implies that the supports are more likely to be broken, while resistances are to provide barriers.

The AVWAP support showing a cyclical support level defined by the price and volume, is at ~17800 USD. This area is considered attractive from the long-term point of view. Whenever there is a retest around this level, it may be expected to be bought back by the smart money.

MTF 4H:

The MTF chart shows a consolidation pattern, which may be considered one of attempts to build a bottom base out of it.

The CTF Trailer for the short-term remains on the bullish side, which suggests that the bulls have the upper vote in the near-term. The upwards tendency is valid until a breakdown below the Stop threshold at 20342 USD. In case this level is reclaimed by the bears with a daily/weekly close below, the bears re-gain the control.

Price action wise, the faster the upwards pattern breakout occurs, the better, as the uncertainty and fear build along with the pattern.

Apart from the support at $17104, the BPRO Level Lines define resistances are projected at following anchors:

32760
28957

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

LTF 1H:

The short-term outlook seems to be pointing to a little bit more skeptical take, as the trend line gets broken.

The upsloping trend lines often work as dynamic supports, as traders tend to adjust their stop losses and buy orders for their loss aversion bias, and regret bias after getting hurt in the past. This typically leads to orders clustering under the trend line, and the longer it takes to develop, the more orders cluster. Hence, the longer trend lines tend to break with more volatility, as the local trend context gets exhausted, or overbought. This is a reason why skepticism should be employed while bidding the breakdown now.

But, the sideways movements tend to provide less credibility for a classical charting techniques. It means that every signal from an indicator, or a pattern like a trend line should be taken with cautious, if it remains within the previous range of highs and lows. More often than not, new high breakouts or new low breakdowns tend to be much more credible.

For those reasons, it makes sense to anticipate a short-term downwards oriented price action to develop based on the trend line break. Yet, the breakout target may not be as larger as expected – it often continues within the range-bound pattern (here: 17.7-21.7k USD)

FEAR/GREED INDEX:

The capitulation-based theme seems to be maintained, sentiment wise. At 14 points on the scale, the traders continue to fear in an extreme way. This often leads to more volatility, if local supports break to the downside. One should never fall for a representativeness bias. Most, if not all, traders tend to look back at certain patterns (here – capitulation bottoms) and extrapolate it directly into the future, based on a very small sample. The past is never a guarantee of future performance. However, contrarian investors may benefit from making entries into oversold sentiment and panic selling of underinformed crowds. Historically, based on the prospect theory, herds tend to be wrong about anticipating the extremes. Hence, it often makes sense to counter trade them in the extremes.

Bitcoin: Net Unrealized Profit/Loss (NUPL)

As the price pattern continues to develop, the NUPL had already reached historically low levels, marked under the category of “capitulation”. While nobody knows how long the capitulation may take to last, historically it has been profitable to buy into such capitulation for longer-term positions. For the context, the most recent crash took bitcoin’s NUPL ration to the lower regions than during the COVID crash of March 2020. However, it’s fairly distant from the lows of 2018 bear market depression.

Both metrics accounted, this may somehow imply that there is potentially more pain ahead, whereas buying into the already capitulation-based periods may turn into historically profitable positions.

For more insights, consult my yesterday’s webinar – check the link below.

God bless!