Daily Report – Bitcoin and Market Update (May 30 2022)
The weekly chart has printed the 9th red losing session in a row, which is the first time in the bitcoin’s recorded history, ever.
If it’s already so over-stretched on the downside, how much longer can the bears suppress bitcoin prices at low levels, near the long-term support area? I would argue that not much.
The price action resides within the same old pattern from 2021, chopping around the 50-week mean of $44202. The mean reversion principle still favor the idea that bitcoin will sooner or later revert back to its mean, fair price.
The support at 28800-30000 USD region has been maintained and saved, so far. Again, potentially promising for an upcoming rebound.
Sharp decline on the 7-week correlation coefficient is quite a fundamental and significant shift, as the cryptos and stocks have loosened their relationship strongly. Such a shift can be promising for bitcoin in case of stocks declines.
The middaily chart has broken through the diagonal resistance derived from the descending trend line, connecting consecutive lower highs. Such a breakout is potentially promising and working in the interest of bulls, much more than bears.
However, it’s too early to celebrate just yet. The CTF Trailer has adjusted downwards to the $31264.5 USD level. Accounting for the proximity of a more round number $31300, I would argue that the main resistance region is yet to be tested. If a successful close outside the boundary is confirmed, this would mean the bulls are back in control with the upper vote in the market.
Notably, the price movements still reside in a short-term range environment, which does not promote any direction per se. Instead, it could be more effective to look at it from the contrarian point of view.
The MTF chart shows an attempt of a breakout through the High Band of the BPRO Momentum Bands.
While this breakout is not sufficiently confirmed just yet, BTCUSD would need a proper close outside the $31000 level, which would contribute to the volatility breakout.
Typically, in times of low volatility, breakouts more often than not lead to failures. In sideways, there tends to be more noise and the breakouts are more questionable. Hence, why traders should not celebrate the bullishness just yet.
Until the breakout comes, BTCUSD is more likely to continue bouncing back an forth between the range bounds, given by the bandwidth space within the 27.4-31k USD zone. The main support is defined at the $29196 Level Line.
Furthermore, the Level Lines resistances could serve as price objectives for the bullish setup, and they are as follows:
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 outlook seems to be well-defined by the BPRO Divergence System.
Per this premium indicator readings, bitcoin is currently a bit over-stretched to the upside. This could potentially lead to a minor correction, which uncontrolled could evolve into a larger fake breakout.
Hence, such a “minor” observation may actually trigger a larger move, ahead of the moment that it happens. The momentum indicators are preceding the price, opposed to the trend-following techniques like moving averages, which lag behind the price.
While this offers high win rate (reliability), it can be painful in case the correction doesn’t take place and a larger trend emerges. If not applied any protective stops, one could sink in large losses.
While the divergence mark can lead to a correction into the 29000 USD region, please remember than on average once every three times, a larger trend could develop and front run the shorts. This is certainly a twist point and an important decision place for many traders. This implies lots of volatility, and risk.
It’s suggested to stay safe and wait for the trend or rejection pattern to form first, and plan accordingly.
As the fear sharpens up at 10 points on the scale, following legendary 9th consecutive week in red, this gives a lot of contrarian suggestions.
This could be potentially promising in favor of a larger reversal pending, provided that no closed breakdown below the 28800 USD level occurs.
While the majority is said to be wrong about anticipating the extremes, I will committing to my long-term holdings around the daily close, adding another portion to my long-term bitcoin position.
It does not time the peaks and troughs perfectly. That’s for sure. However, it can still be source of valuable insights and contrarian tips to ensure profitability.
More in my exclusive video report insights. Access below.