Daily Report – Bitcoin and Market Update (October 26 2020)
Weekly session closed above 13000$ for the first time since January 2018. It’s 7th highest weekly close ever for bitcoin, which strongly and successfully invaded 2019’s supply zone of 13-14k. This is a very strong historical close for BTC/USD. It also proved local rejection and resistance area between 13000 and 13400, showing the evidence of short-term supply and distribution of profits. The distribution was not big or significant per its size yet it doesn’t invalidate the fact that it’s there. It suggests that it is poor risk/reward to long with short-term positions right into this resistance zone until it is reclaimed as a new support zone. The week advanced with a range of 15%+ which came with about 2000$ movement. On the weekly timeframe, the breaker week has also confirmed upside continuation and expansion expected due to making higher high and closing HTF session above 12480 as mentioned in the past reports. Price action wise, it is one of the best weekly closes for bitcoin ever. 50-week moving average along with VWAP bring confluent support 8.9-9.1k layer, which could serve as a support zone in case of another unpredicted FUD event, black swan crash, economic collapse, etc. IMO the next weeks should easily bring 14600 level, that I keep talking about for past 6 months straight. Short-term corrections are for buying. When 13-13.8k (14k) supply of 2019 is reclaimed as a new support, the next levels are 16000, 19000 and ATH.
Daily sessions are moving in typical sideways, corrective movement due to long traders taking profits. 13130-13400 is of short-term distribution that makes this zone forbidden to long into unless intraday scalps. It’s better to keep it safe than sorry. For now it seems to be a typical consolidation under the resistance setup, which more often than not brings trend continuation and expansion in the prior direction – upside. I’m personally still having 12395 marked as the level for some of my unfilled long-term bids for bitcoin in case a rejection comes – it would be also quite typical on Mondays around 4pm utc or right before the daily close if you look at the statistics. Risk/reward ratio for longs is not ok for short-term that is why most of the traders will do much better if they wait for the short-term throwback retracement. As mentioned in my last report, the daily bull flag breakout target reaches as high as 14400s so in theory there’s still room to grow. VWAP + MA50 provide strong support in 11.1-11.3k area in case heavy retracement comes in a big uncertainty spike as we approach US elections – must not be ignored.
Middaily session analysis provides great insights for the MTF context of the entire upside impulse movement for bitcoin. It clearly shows the evidence of upside breakout over 9800-12480 zone, giving 2600$ movement as a result as the base size of this rectangle chart pattern. If the breakout retest holds the support given by the range highs 12480 that now turned into support, additionally backed by short-term VWAP, then technical analysis would suggest 15000$ as the breakout target. The bullish scenario is presented in the BTC/USD chart attached. Bearish scenarios would include steep decline back inside the range below 12480s, invalidating this level as a support. In such case, the next support levels are 11.1k and ultimately 9000, yet probability that it happens is super low.
MTF picture shows clear invalidation of an upside breakout over the bullish pennant setup, which eventually makes this sideways movement more of a distribution than reaccumulation so far. What does it mean in practice? Professionalist breakout is a way to trap new traders lacking experience, late long positions buying the top with a good looking breakout and then instant dump: here with the size of 400$. Definitely not a generational top, but so far it’s looking like a typical top, which might align with classic Monday’s dumpish market context. Key for downside expansion and breakdown is closing 4h session in an ugly manner below VWAP and volume profile support at 13000. Next supports for bitcoin short-term are 12.4-12.5k, 11730, 11330.
Hourly raindrops are forming typical range with more of distributive nature coming from 13.4k-12.9k dump. Aggressive dumping is usually followed by downside trend expansion as long as the breakdown conditions are met. In this context, BTC/USD could find the support at 12500s, 12300s only in case as follows: 1. Breakout retest rejection at VWAP+MA50 confluent resistance at 13050 2. Downside breakout with bearish retest of the range lows at 12685. 3. Break of MA200 1h If these conditions are not met, the downside correction is rather improbable and bullish scenario 14k+ could be the case. Until then, it is suggested to rely on the full scope of this market report. Got a present for yall that can teach you how to diversify and allocate your profits with a new method if the conditions are good. Link below.
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