Daily Report – Bitcoin and Market Update (November 26 2022)

HTF 1D

The daily chart displays an instance of a failed breakout at the bottom after the previous pattern (pennant) failed.

Failed patterns often perform better in the opposite direction, as trapped orders get forced to cover with a buy-back higher, lifting the demand pressures.

To catch up with the large-cap stocks, BTC would need a ~30% rally. This shows significant underperformance and relative weakness. Such a strong lag often implies that this tendency may intensify more likely, than revert.

The 200-day mean represents the bear market trend line. Any heavy deviation against the long-term trend generates an opportunity for a mean-reverting trade, knowing that BTC will eventually catch up with the average.

For now, the 22000 USD level acts as the bear market resistance. If broken to the upside, the bears receive a big red flag and a warning.

MTF 4H:

The MTF chart gives a deeper look inside the fake breakout at the bottom.

Following the break failure, BTC is now traveling in a horizontal channel between 16400 USD and 16800 USD.

Such volatility contraction may suggest a more explosive move outside this channel is pending, as volatility fluctuates – expands, and contracts interchangeably.

Overall, the bottom overthrow remains significant enough to monitor.

Failed patterns are often driven more sharply in the opposite directions than anticipated. For this reason, a short-term direction to be expected more likely is upward – toward 17500 USD.

FEAR & GREED INDEX

At 22 points on the scale, out of 100, the extreme fear prevails among investors. As long as it does, it generates mean-reverting contrarian opportunities, where the contrary position can get more profitable over time. While it’s not a timing indicator just like RSI or moving average crossovers, it can suggest what most of traders pushed to emotional extremes anticipate. Most of the time, when in extremes, they are wrong.

Bitcoin Average Mining Costs

Bitcoin: Net Unrealized Profit/Loss (NUPL)

Definition: “Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap. Assuming that the latest coin movement is the result of a purchase, NUPL indicates the total amount of profit/loss in all the coins represented as a ratio. It could be interpreted as the ratio of investors who are in profit. Values over ‘0’ indicate investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This phase indicates the increasing reason to take profit which leads to an increase in sell pressure.”

At the -0.22, the NUPL ratio proves most of the traders are netting losses in these market conditions. The current NUPL setup resembles slightly the reversal patterns from the past. While there is no guarantee the history repeats, such potential bottoming (process) patterns should not be ignored by technical traders.

Hope it helps.

God bless.

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