Daily Report – Bitcoin and Market Update (June 29 2022)
The middaily chart continues to print new bars in the local rejection theme, off the 21900 USD highs.
As explained before, the overthrow at the peak marks the resistance area from 21700 USD to 21900 USD. This should be considered a supply zone, coming from the resistances clustering. Price action wise, BTCUSD is also nearing local support area, at the swing lows of 19700 USD. A clean break below may suggest further downside continuation, which may be still the dominant assumption.
The CTF Trailer remains on the bearish side, meaning that the bears hold the upper hand in the market. The critical threshold rests at $23061. As long as this level is not reclaimed by the bulls, the prevailing theme is oriented to the downside.
The first significant sign of strength could come with BTCUSD breaking above the resistance cluster at 22.4-23k USD. A proper reclaim over the 200-week average should add confluence to the upwards reversal pattern breakout, potentially aiming for higher objectives.
The MTF chart has recorded BTC to flip on the bearish mode per the BPRO after breaking below 20600 USD.
The CTF Trailer has switched the polarity to the bearish side, and now the bears hold the upper hand in the market, for the short-term – until the $20878 level is reclaimed back to the upside. This increases the chances that the near-term bears may take BTC prices in the lower area of the pattern range (17.5k-21.9k USD).
The price action based support is at the prior swing lows at 19700 USD. In case this level is broken, the lower price objectives unfold.
However, a more relevant support rests at $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 is approaching the swing low support, at the low end of the range pattern.
Coming off 21900 USD, BTC has now retested the low area at 19800-20000 USD.
The overthrown peak boosts the chances for a potential support failure. It is, because failed patterns tend to perform better than the regular patterns, in the opposite direction than the one anticipated on the breakout direction itself. For that, a support break at 19700 USD might accelerate the downwards selling pressure into the 18500 USD area.
The range pattern holds a 2000 USD base size. This means, that the downwards breakout could also imply a price objective based on the measured rule at 17700 USD. The proximity of the swing lows at 17500 USD may be of significance at that region – meaning that there is a chance BTC gets a similar overthrow at the bottom to revert back right after. While it is not certain or set in stone, one may need to account for such a possibility.
Overall, it is clear that after breaking down the upwards trend line, BTC keeps searching for a new, more sustainable trend line – slope of the trend. A crucial confirmation, for the current price action, could be brought with a reclaim over the 20700-21000 USD resistance – the mid range area.
Little update to the sentiment side of the market, as the index hand points at 13 units out of 100. The ratio remains in the capitulation stage, as the extreme fear conditions barely improve on the daily basis. Historically, buying into extreme fear or panic selling of the capitulation stage have brought more returns than for the sellers. The hopelessness in the market is dominant and apparent. While it may take some time (this is NOT a timing indicator!), the contrarians are more likely to be correct at anticipating a mean-reverting move to the upside in the long-term.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
The NUPL ratio has decreased slightly to -0.10. The ratio belongs under the “capitulation” category, and should be considered such. While it does not make any promise that the prices may not go any lower, it rather hints on the potential profitability of BTC purchases in this zone. If history is of any lesson, then the revulsion themes provide the highest potential return with relatively low risk (low price distance to the lows).
IMPORTANT: While making any purchases on any of the indicators above, it is essential to understand that for a limited time, one’s entry may get underwater. As any other momentum based indicator, it anticipates trend reversal based on overextension of the prior trend. Because trends have the tendency to persist, one consents to enter the position counter the market trend. Without risk management, no investing tactic may need to be profitable.
Hope it helps.
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