Daily Report – Bitcoin and Market Update (November 02 2020)
Monthly candle closed as one of the most bullish sessions ever for BTC/USD. Overall monthly range gave 35.84% change measured from the low to the high. October’s close happened to be the second highest monthly close ever, lacking only ~60$ to break ATH in the linear chart. This tiny tiny difference can still be interpreted bullish. Rejection size is minimal proving that out of this entire massive range 10380-14100, only 13816-14100 zone can be considered resistance cluster (supply) right now as opposed to 10770-13880 supply of 2019. I think that majority don’t really follow the significance of October’s candle close. It purely means, that entire resistance area of 2019 is not of any resistance anymore. The supply inside 2019 highs zone has just been annihilated leaving unquestionably bullish space for bulls for further upside expansion. It also means that for the time being no longs are safe inside 13816-14100 area. On the macro perspective, bitcoin made higher high over 2019 high, which gave technical confirmation for monthly uptrend that will most likely lead the market participants to the new ATH. Bullishness of this massive candle is unprecedented. Monthly support area is given between 12065 and 12473 levels, confirming this is a buy zone.
Weekly candle closed as the highest session since January 2018 (!). How important is this strength that bitcoin has recently been showing despite economic recession. On the weekly timeframe it clearly keeps making new highs and higher lows, which is exactly what defines any uptrend. Moreover, in past weeks BTC/USD has only been accelerating the upside expansion and shorter term trendlines has become steeper every single time. Key weekly levels are: 14100, 13880, 13200, 1280, 11740. What’s more, inside 2019 supply bitcoin has recently shown nothing but insane strength, practically invalidating resistance effects of the old supply. This is now bull’s area and it is unquestionable. Moving averages keep moving up with clear support zones 9000-9300 (MA50+VWAP) and 7060 (MA200). Next milestone resistance area on the weekly chart is 16100-17200 and as long as the supports given earlier are held one after another, the direction is upside-oriented towards 16-17k.
Daily candles have been forming upsloping distribution in form of multiple spinning top candles with lots of intraday dumps, 500-1000$ each. It means that MTF traders consider this area already quite overbought and good spot to take at least portion of big profits off the table. No matter it marks up before a sharp decline or not, unrealized profits on longs are no profits. It is unquestionably an amazing upthrust movement for about 3000$ difference and many should take profit around these market levels. Target of the daily bull flag breakout can also be considered reached. 50-day average has just scored new highs breaking September levels around 11200$. Levels given in the analysis section of weekly timeframe are confluent with the levels printed as key supports in the volume profile visible in the breakout period analysis. Volume profile spikes appear in 13-13.2k and 11.4-11.6k zones with VWAP value 12473. These are going to serve as supports if btc starts MTF retracement for 25-30% corrective 4th wave decline.
Middaily session practically confirms all that has been mentioned above already. What’s unique about this chart though is that brings the evidence of regular bearish divergence formed between sequence of higher highs on price action and lower highs on momentum (birbicator). As the momentum keeps retracing sharply with little to no retracement on price action, it means that there might also be a hidden bullish divergence printed within next 2-3 days, which in case that the momentum drops into oversold area (0-20 points), this might be perfect buying opportunity. Key levels are presented by the breakout-VWAP support at 13050, 12480 support (previous range highs + MA50) and 11700 (pre-breakout resistance + MA100/200 approaching). If btc violates VWAP support in an ugly manner on big selling pressure, the next levels at which traders could expect bullish reaction from the demand side of the market are the already mentioned 12480, 11700.
MTF picture presents great example of how the fan principle works. It is a set of 3 trendlines, subsequently accelerating (in uptrends) or decelerating (in downtrends). In every case the trend evolves into exponential structure highlighting increased pressure on the side of FOMOers or FUDers. The steeper the trendline becomes, the less sustainable it gets. Hence it’s naturally rarely ever possible that an asset keeps trending up or down, oscillating around the steepest trendline. When the steepest one is broken (LTF trendline), the next support is provided by the middle trendline (MTF trend) inside the 3-trend fan. In case of a major market failure powered by unpredicted FUD-driven news (beware: may regard US elections), the lowest support is provided by the least steep trendline (HTF trend). The trendline supports are as follows:
Locally, as long as bitcoin stays on top of MA50, it would still trade inside a distribution zone but still with no breakdown. Ugly dump candle closed below 13000 would put the lower supports on the table. Until it happens, upside potential is still there, although completely unsafe for longs. Primary trend is up, hence any major correction provides traders with nothing else but buying opportunity way more than short selling exponential rally.
Hourly sessions presented with the raindrop chart from amazing TrendSpider.Current volume profile analysis of the entire distribution period brings the main conclusions as follows:
Once MA200 13430 support is lost, the next key support area in the chart is Point of Control (PoC) at 13120, although as one can notice, entire 12900-13200 area is filled with strong volume supports – shorts forbidden here!
Key local resistance area is 13700-13830.
If 12900 level is broken, the next support level is 12630.
Don’t try to catch the top or bottom. It’s impossible to achieve this as it’s the whales that are responsible for major swings on the market and thinking that one can reverse the entire market with their 100$ short position is nothing else but stupidity and the person doing so can be called a “liquidity provider”.
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