Daily Report – Bitcoin and Market Update (October 2 2021)
The last month of Q3 closed with a spinning top candle of rather mediocre volatility range. It proves that September had consolidation-type of movements mainly where intramonth price oscillated between the extreme high and low of the range.
Monthly resistance from ATH candle floor was breached deeper than for August which shows decreasing strength/defense of bears hidden between 47044 and 58800. The said area is considered a monthly supply and the supply floor is determined by the pre-breaker support of April’s candle low (polarity change – ex support turned into resistance), while the high ceiling of the supply Is considered 58800 as that was the level over which any price action was effectively distributed and sold off showing weakness. The moment that any monthly candlestick invades and closes inside the monthly supply zone, this confirms more and more the new ATH coming as bears lose their control in their strategic area.
Seasonality and Q4 suggest that historically Q4 was always (except for 2014, 2018 bear markets) of extreme upwards volatility returning double-triple digit % returns on average. I expect no different this time. Seasonality is on the bullish side.
Momentum & trend wise, Birbicator has confirmed bullish crossover for momentum proving that the long-term market upside continuation is to occur. The direction is stronger to the upwards again. Monstrous signal giving the overall narrative for the next few months.
The middaily chart has seen a very powerful breakout on multiple layers with massive confirmation across the board coming from: momentum, volatility, chart pattern, Volume.
Clean breakout with massive momentum boost in the upwards direction seems to confirm the beginning of consequent upwards direction for BTCUSD for next weeks.
Volatility wise, bitcoin brought abnormal volatility in the upwards direction with a very strong Bollinger Band breakout with definite close over the upper band. It clearly exposes the new directional tendency for bitcoin where the volatility serves the bulls better.
Chart pattern wise, we additionally saw down trendline breakout which at the same time was the resistance of a falling wedge pattern.
Volume additionally confirms the breakout as the up-thrust candle broke through two key main aVWAP resistances 43699 and 44991. This confirms the price is trending up over the averages.
Finally, do NOT get over excited just yet (excited is fine but not OVER) or reject any bearish thesis as we’re still trading in the large 28.8-65k range and until we break out above the ATH, bulls are not fully unleashed. It’s as if they were showing only 50-70% of their real strength so to speak. As long as we trade inside the 6-month range, the long term narrative is sideways. The final leg up and ultimate FOMO from every side will come after breaking through ATH, just like it always does. For reference, check Nov-Dec period of 2020.
MTF chart buried the late bears and low 40k shorters in the extreme fear, again and again. Who could have guessed? 🙂 The range concept is still valid. The recent breakout above the triangle chart pattern within extreme fear environment proved much larger strength and validity of the demand zone as marked in the chart. Locally, I’d expect local consolidation between 46k and 48k in whatever form e.g. pennant, triangle, rectangle, followed by a bullish breakout into the supply zone as marked in gray 50-53k. This time though, Id expect bulls to take over this area and reclaim it as demand zone which would further favor 58-60k region retest in the next impulse.
As always, as long as it trades inside the range, there are 3 strategies that apply (here – for short-term traders):
- Inside range trading (buy range lows or sell range highs)
- Outside range trading (buy the breakout retest or sell the breakdown retest (the latter irrelevant atm)
- Do not trade the range at all and wait for the trend to come up.
The main volume based resistance cluster of 45-46k got smashed in one shot proving all the bears there wrong. Best for bulls so that bitcoin does not lose the volume shelf 45-46k again as it could generate market confusion and longer sideways, more indecision and waiting. The longer we stay in the range, the less bullish momentum the movement has.
Eventually, 40-53k range breakout would lead to another attempt to break through the 65k ATH as the base size of the pattern is 53k-40k equals 13k and this 13k added on top of the breakout level 53k+13k equals 66k places it somewhere in the new ATH region.
It matches well Q4 and October seasonality narrative and my overall final leg up thesis.
The crowds are always wrong at the extremes. They were wrong again at 40k lows claiming it was bear market assigning extreme fear sentiment towards these levels.
The more extreme emotions, the wrong-er the crowd is. That’s all I can say. You knew that was coming as I made sure to lay it all out clearly for you over past weeks.
We’re ready for Q4 🙂
P.S. In case you missed my yesterday’s webinar, please make sure you catch up with the replay ASAP with the link below. God bless!