Daily Report – Bitcoin and Market Update (November 09 2020)
Weekly candle closed with a very strong confirmation that long-term BTC value wants to be much higher than current levels. Candle closed above the broken resistance, which according to polarity change principle, flipped to long-term support 13880. After being rejected from 15.5k-16k supply, BTC/USD price action suggests it might not be best idea for short-term traders to long into the supply after such an explosive move without a correction. Such a vertical thrust of 60%+ range with no correction is usually rare unless It’s one of the euphoric stages on tops of the markets and I personally don’t think we are anywhere near generational top after ATH. After 16.1-17.2k supply zone is reclaimed as new support area, then next resistances are 18.9k, 19.6k, 20k, 26k, 30k, 35k, 40k, 46k. Until it’s reached, the supports below that matter the most are: 13880-14000 demand, 12480-12500, 9600-10300 (in case of unpredicted black swan crash).
Daily session have recently been meeting clear intraday dumping going on whenever price approaches 16k. Very strong upthrust candle from Nov 5th was penetrated significantly by market selling which brings technical questions against strength of current phase of market advance with no correction. It’s definitely trading sideways on low timeframe and the key levels are 14-14.3k demand zone (range lows + 14000 round number). Entire 12.5-13.8k is considered very strong area full of supports including Point of Control PoC, Volume-Weighted Average Price VWAP, MA50, LTF VWAP. This is definitely no short area, although it’s generally suggested NOT to take short positions on exponential rallies of bull market, unless you hate money.
Middaily sessions have been confirming 15.6k-16k is of strong resistance and inside there are distribution processes going on from market selling that gets stronger with every dump. Momentum is overbought, although it should be widely known that momentum as well as other indicators than Volume-based VWAP are showing reliable signals of reversal when the trend is insanely strong. Market can remain in the overbought phase for a very long time and still not bring the reversal. What’s certain thought, is that the lower the momentum declines, the better buying opportunity it becomes. From technical point of view bullish signal for safer buying after a correction comes after bullish crossover (birbicator stochastic ribbon turns from black to orange near oversold area. That will be perfect scenario for longs for short-term and medium-term traders. Levels at which such scenario can happen most probably are 14-14.1k and 12.4-12.5k
MTF picture presented on a raindrop chart reveals that the most important short-term levels are diagonal support 15k and resistance 15.8k that form symmetrical triangle form of cconsolidation, along with MA50 support right below the diagonal 14.6k, 14.1k, then 12.8k MA200. These are the levels that bitcoin is supposed to achieve in this correction movement assuming the breakdown and reclaim below MA50. Breakdown of MA50 would confirm downtrend based on Dow Theory, which is the minimum needed to safely assume downwards continuation sub 14k. To make it happen, there needs to be one major decisive market selling dump of 1-2k decline range in a single daily session. For correction purposes, It would be even more reliable when such an aggressive selloff occurs under 1h timeframe. Shorting is almost forbidden in such market context as traders are currently seeing due to multiple intraday traps, fake breakouts, liquidity hunts. Chasing top or bottom never works as it’s not some random trander’s 100$ position that reverses market but 30-100M $ market orders often put on leverage. One should not attempt to outsmart whales.
Linear chart on the hourly timeframe proves current corrective wave happens to be forming symmetrical triangle or bullish pennant. Although, personally to me it seems more to be a triangle than a pennant as the structure seems too “lazy” and distributive on intraday basis, which shows the momentum has already slowed down heavily. It’s a game of probabilities including a lot of market manipulation coming on a daily basis from central banks, investment banks, institutional investors, retail whales that can literally turn things upside down in the matter of minutes (compare: XAU chart). Traders could expect a lot of bull traps, false breakouts coming from professionals who collect liquidity this way to ensure low slippage/spread while closing positions in either direction. The triangle for these reasons can easily break up to mark a new high, trigger late longs again, then market dump with compressed liquidity of top-buyers.
Onchain analysis proves that the latest big deposits on the exchanges were most likely coming from miners, who apparently have started selling off 15.5-16k supply. If that’s the case, combined with massive increase in exchange inflows and overall trend unsustainability, may be yet to bring the final dump waiting for the ultimate trigger. On short-term timeframe, losing 14.5k and closing day below may be one of the accelerating reasons.
To sum up:
Long-term BTC is to reach ATH. MTF trend is exponential and over extended, needs a healthy retracement into 12-13k area. LTF trend is in the corrective wave of pennant/triangle which in the most bullish scenario ever could teleport BTC/USD to 18k, although IMO it’s rather improbable. Instead it’s trading inside range between 14.3k and 16k and scalpers could buy the lows and sell the highs to TP as many times as market gives until proven otherwise. It’s definitely not safe to leave all the profits on the table after such a move. For more onchain analytics, please watch our latest podcast where we break it all down to pieces. Hope you enjoyed this report!
Learn onchain analysis here – https://youtu.be/WzlUVLF3k4k