Daily Report – Bitcoin and Market Update (November 20 2021)
The daily session closed as an innocent spinning top candle with candle real body oriented in the upper half of the day range. Currently retesting important aVWAP resistance level of 58866 anchored at 40k September lows. The day managed to close through local price action based support/resistance level 57820. It’s nothing too extraordinary that would show immediate bullish strength, but it’s a good start.
If said 58866 sees a daily close through from bitcoin, it should suggest that 61575-63000 should be the next area of interest that would decide about bulls’ failure or success for short-term. Long term trend hasn’t been changed or stopped – it’s shown its strength already with new ATHs printed one after another. In case bulls succeed then the next resistance is 66222 as the pre-breaker level (last bullish bastion that once broken it resulted in massive drop). Otherwise, aVWAP support of fair price of bitcoin based on price and volume analysis ever since July 21st is 49556 which could be a case of unpredicted FUD news event – military conflicts emergency, FED’s new deflationary policy, China bans, Evergrande, etc.
Momentum wise, the trend has reset to the levels unseen since when bitcoin was trading at 30k usd. It’s huge reset while bitcoin is trading almost 100% higher. IMO this is pretty massive signal to back up some more accumulation around current levels. It doesn’t mean bitcoin may not reach a bit lower prices. It means it’s a good buying opportunity, a bit similar to 30k lows.
MTF chart is showing a wedge pattern with a proper breakdown. The breakdown should follow up with a breakout retest as an upside pullback into 62000s. That scenario is unlocked (with potential further follow through higher) only if the volume profile resistance at 59.7k is broken and reclaimed with a strong 4h candle close or daily close through.
Moving averages MA50 & MA200 have seen a short term bearish crossover as a result of the breakdown which points out short-term vulnerability of bitcoin. MA200 shows a short-medium term trend direction which has been disturbed by the Evergrande news reversal on the top.
It’s NOT a long-term top or a bull market peak with 100% certainty and only unpredicted global financial crash with all financial markets crashing prematurely could disturb this thesis. Highly improbable. But as any other correction, it’s a good reminder that no market goes up forever and it’s worth realizing your profits on the way up.
Bitcoin: Net Unrealized Profit/Loss
NUPL has retraced by around 13% off the highs around 69000 USD bitcoin levels. It’s not at 0.581 and back to the levels of early October when the price of bitcoin had freshly broken out above 40000 USD. I’d consider that a healthy, natural throwback. Nothing about this move seems to me unhealthy or that it would disrupt any long term plans about BTCUSD crossing 100000 USD targets soon.
When the market gets too complacent, it tends to over leverage themselves as the sentiment and certainty grow around the peaks. In order to clean the mess coming from the leveraged futures, a cascade of liquidations usually comes to wipe out the traders and flush the illiquidity out of the market. This generates compressed buying/selling zones where whales can buy or sell a lot of scarce asset with little undesired slippage.
My exit strategy intensifies over NUPL>0.75. I keep realizing profits slowly but surely after every major upwards movement. Hard assets is where my money goes.
Bitcoin: Mean Hash Rate (168h MA)
As Glassnode explains, the metric stands for the average estimated number of hashes per second produced by the miners in the network.
Interesting catch is that the onchain side of computational power utilized in bitcoin’s blockcain right now keeps soaring and ascending aggressively despite the price has seen short-term declines. It’s an interesting symptop which imo suggests that despite the market shows weakness locally, the network fundamentally and onchain wise keeps improving. Hence, it looks as if it was a form of bullish “divergence” making bitcoin locally undervalued.
Fundamentally bitcoin’s network climbs up and as a result every major dip of 15% or 30-40% that will come will serve as a buying opportunity as long as the hashrate ascends.
As the metric suggests, after a drastic sentiment flip from 72 points on the scale last week to fear regio of 34 points yesterday, the market has become neutral at 43 points.
This may imply that after cascades of liquidaitions on the decline day, a lot of traders have been wiped out and “learned their lesson” that it’s not worth pressing highly leveraged poisitions at extended market levels. The denial in their minds is slowly passing and they’re starting to realize what went wrong. Now the bull gamblers have turned neutral showing it’s not necessarily the best timing to make any big entries, positions.
The crowds are always right in the middle of trend and always wrong at the extremes. I’m not sure the sentiment shows we have bottom already. But remember that the sentiment is a lagging indicator and it reflects human behavior AFTER pumps or crashes occur.
All that said, I’d not based any entries solely on fear/greed – wait for price action to confirm strength over certain levels mentioned in the report. Different case was at July’s lows where extreme fear had held for over 80 days in a row. It’s not the case here so the risk of being wrong is naturally bigger. I’m long from 29600s and low 40000s so I’m not urged to make any rapid decisions. More details in my exclusive video report for the premium subscribers.
It’s always worth taking profits when the market is greedy, just like I mentioned several times before the drop happened.
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