Daily Report – Bitcoin and Market Update (November 23 2020)
Weekly session closed with total volatility of 3000$+ price difference between week extremes. It also met the rejection of 18.9-ATH resistance, confirming that 18.3-18.9k zone is (at least) short term supply and area of resistance. Until this zone is reclaimed as a new support, long-term traders should not be adding to long-term position in here right into ATH zone. Risk/reward otherwise favors shorts rather than longs, but shorting insane bull rally usually ends up with being a liquidity provider for whales. While looking up towards new ATH, one should never forget about the supports beneath, that is: 16.1-16.5k, 13.8-14k (2019 highs), 12.5k (pre-breakout resistance, flipped to support). Also, very strong advance of MA50, combined with blue VWAP confirms support area at 10k, along with MA200 at 7400. These levels could serve as bounce back areas in case of another black swan crash if it ever happens.
Daily candlesticks are showing local peak consisting of a high-wave doji on top (beware of such candle formation, it means rapid local trend reversion), which is quite often met on peaks. Saying this is the top or not would be nothing else but just guessing where massive whales decide to sell off, while there of course is a lot of technical rationale and reasoning behind this being the top. The doji on peak was followed by a volatile downside day with a strong pullback from FOMO buyers that allowed the price to bounce back from 17.5k support area. Peak structure gives 3 candles: Strong upside thrust on the left side, doji in the middle and downside volatile sell-off candle that was bought back on the ongoing volatility. It’s a sequence of a High, Higher High and Lower High (with Lower Low). The way a trader should interpret this is “beware, this may be the top with a lot of confluent confirmation, although it’s questionable. One way or another, it is suggested to lock in at least some partial profits. Supports shared in 1W analysis remain the same over daily timeframe.
Middaily sessions have been holding local VWAP support at 17.8k proving that the greatest volume-significant level that needs to be defended is the mentioned 17853. In case of breakdown below this level, the next average price support is MA50 at 16000, MA100 at 14000 and MA200 at 12.5k. Momentum is still trading in the sideways channel and in case of visible breakdown below the floor, the bigger correction is supposed to start. That’s how you can know if the correction is just buy-the-dip or factual trend reversal. Unless the above mentioned happens, traders can still look up for final blow-off top resistance at the levels: 20200, 21230, 22610
MTF picture provides a clean picture of how on-the-edge current BTCUSD setup is. It’s currently forming Head & Shoulders patterns, which in case of breakdown below the neckline at 17.7k, which is confluent with VWAP and MA50, could mean strong reversal symptom and potential follow through towards 16.3-16.5k area, which could further evolve into deeper retracement. 18.3-18.5k aggressive demand short-term zone failed to work as support which can be considered a red flag for the ongoing uptrend. Confirmation comes only with successful breakdown and failed retest. Unless that happens, the trend is up. In case of a major sell-off, instant support to find strong bullish reaction is at 15.2k
Not much to repeat after all the mentioned above. Local H&S pattern seems to be confirmed by volume profile of the factors to the formation, i.e. left shoulder and head and these levels are confirmed by the right shoulder. It all provides a confluence between different indications and such pattern should ALWAYS be viewed seriously. Once MA200 + neckline level is lost at 17.7k it may accelerate the downside contraction and result in sharp price decline. It’s worth to lock in some partial profits at least, while still looking up at the levels mentioned before and in this chart. We look up, because the trend is still up until Lower Low appears. Simple 🙂
P.S. stay tuned for Black Friday. It’s coming.