Daily Report – Bitcoin and Market Update (November 22 2021
The weekly candle closed as a bearish engulfing type of a candle which excluding the context usually is followed by a further decline. Will that be a case? Not necessarily.
After making new ATH levels at 69k USD, there’d come a time for bitcoin to retrace by around 20% off the highs. Is that natural? Yes, indeed. Bitcoin tends to present investors typically with a few types of corrections:
LTF 10-20% retracements (typically 15%)
MTF 30-40% retracements (typically 35%)
HTF 50-90% retracements (bear markets)
Currently BTCUSD is trading in the previous weakness area of reversal regions April-May 2021 and ever since it entered this zone in early October, we’ve only seen one sign of “weakness” here – the last week’s close.
Traders tend to memorize painful experiences of the past and because of that they’d expect current BTCUSD scenario to play out exactly the same as it did in April-May period. Technically speaking, the probability that two similar patterns occurring one after another behave exactly the same in results is very low.
Two main mean reversion supports are given by 20-weak average and 50-week mean. The supports are 50.5k USD and 46.2k USD accordingly. Those are subject to mean reversion under condition that unpredicted FUD news arrives: military conflicts, FED’s rate hikes premature imposing, financial markets crash globally, etc.
Im very well positioned from 29600s and 40-41k USD longs so Im not really bothered personally by this current price action and Id rather consider local fluctuations more a market noise than anything else.
This chart doesn’t look bearish at all or enough to pull off top reversal at current rates.
The daily chart has looked better for sure, but there’s no reason to panic. It’s still showing some form of a sideways movement rather than an actual downtrend. The reason is that a downtrend is a sequence of lower highs and lower lows. We haven’t seen a lower high yet – instead we’ve seen a higher high, which makes it all some form of expanding consolidation. The price action is clearly missing a lower high around 62-63k USD area and upside pullback into this region is the next logical move for the next days or weeks.
Two crucial price action levels are 66222 and 57820 which act as resistance and support accordingly. Because rarely ever bitcoin moves down 20% without any upside correction, I’d expect at least 61100s to be tapped and more likely 63000 as a mid-range area knowing it’s in fact consolidation and not a downtrend.
Based on volume-backed levels BTCUSD is looking at 58855 for short-term reference and 49677 for medium-term reference as a support.
Naturally, a technical trader should anticipate moves and scenarios based on the charts they read and here it makes sense to be ready (highly unexpected but doesn’t mean impossible) just in case a FUD news activates for low 50000s throwback, possibly after 63k pullback first.
Other than this, daily/weekly close over 66222 or 69000 USD brings 70k, 80k, and 90k to the table.
The middaily chart is showing a local volatility scenario with descending orientation of the volatility. Both Bollinger Bands are decreasing locally with 20MA median trending down.
I don’t like the fact that the upside pullback off 55500s to 60000 hasn’t been too spectacular. To me it looks as if the demand was not really stepping in at this region which brings bit higher chances for revisiting low 50000s before upside continuation. That might be a leading assumption as long as BTCUSD trades in the lower half of the bandwidth.
The bandwidth area between the bands shows off a regular volatility range between 54.8k and 66.3k USD and that’s where BTCUSD should trade at for 95% of the time in the near short-term future.
Short-term looks a bit more bearish than bullish while remember it’s still a form of expanding consolidation than a proper downtrend gauging on price alone.
Local support may happen to be 54.8k provided that BTCUSD sees ugly daily close beneath 55.6k
Those low timeframe movements do NOT interrupt medium or long-term trend direction which is upwards.
MTF wedge after the breakdown continued has seen a local rejection at PoC volume spike level at 60000 USD. The longer this level keeps getting rejected with same aggression, the more realistic low 50000s becomes.
Both averages are trending down: MA50, MA200 which clearly shows that intraday and last hours the market has been more bearish than bullish, aka correcting.
Price action wise, again, we’re missing the local upside pullback which would play the role of a breakdown retest.
The wedge breakdown target reaches 53000s so worth having some cash aside for catching dips if one is a short-term trader and knows well what they’re doing with their money.
All things combined, the market on micro timeframes (full of noise) is trending down locally while still awaiting the breakdown retest into 62-63k USD region where another attempt to break through will take place.
Hourly sessions show highly unstable yet no volatile market action for the past few days. It’s typical sideways price action where you may think you spot certain price patterns but every formation gets faded quickly. Every upside breakout sees a full retracement soon after and similarly every downside move sees a rapid upside pullback covering the bearish price action.
In other words, pure sideways with no trend. This means there’s an ongoing battle between bulls and bears which is quite neutral in the result as strength of both is pretty much the same in these regions between 55500s and 60k USD.
That said, there’s a small difference in the bahavior between the bulls and bears. One may notice that dumps tend to last longer and rather expand into multiple hoursly sessions of subsequent declines. After that, bulls step in rapidly with proper market buying candles of 2000-3000 USD range. This tells me that current levels is being bought up by whales considering 55-60k USD entries a good long bet. However, the market buying shots are singlets rather than sequences. This suggests then, that it may not be a final bottom for the next hours-days and also gives chances for 50-53k region visit.
The entire market action looks as if it was anticipating some final liquidity flush to wipe out traders and induce extreme fear in the market.
As mentioned, Im well positioned from 29600s and 40-41k USD so I don’t really feel the need or rush to make any decisions to close longs or open new ones as Id done it before well. If one is a short-term trader though, it may be worth having some spare capital to load the dips in the occurrence of 50-53k liquidity hunting which could be triggered by FUD news.
Bitcoin: Number of Active Addresses (168h Moving Average)
Just like glassnode explains, this onchain metric stands for the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted.
One can tell that a 7-day average applied on an hourly chart basically reveals sideways – market taking a breath/break to rest a bit here. This short term average suggests that onchain is in tact with the price bahavior and both are more or less trading sideways.
The fact of this horizontal movement occurring right now is an additional evidence behind the market waiting on the sidelines and not really rushing with over buying or over selling.
It’s not a bad place for short-term longs but likely better opportunity may be coming as long as onchain doesn’t show off any significant influx of the demand.
FEAR & GREED INDEX
50 points means the most neutral sentiment it could get now. Neither bullish, nor bearish – just typical to sideways movements. The late shorters got rekt and the late buyers got rekt. They meet in the middle of the battlefield now with no actual action taken.
I dont necessarily like this neutrality here as I’d prefer for the market to fear much more to make it a bottom call. Per the sentiment (combined with reported price action analysis), it doesn’t look bottomish just yet and rather looks as if there was a need to have this one final dump to flush the weak hands away and make the room for large players to come in.
Long term narrative of BTCUSD passing 100k in next weeks hasn’t changed at all on my end. People are panicking in the comments under my tweets literally but somehow the fear/greed index hasn’t reacted well. I assume they’re near their liquidation prices and are yet to get liquidated. When that happens, the denial and anger come in and fear/greed index should flash extreme fear for a moment. That’d be the most likely bottom scenario imo. Until that happens, I would not rush or leverage these levels.
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