Daily Report – Bitcoin and Market Update (October 31 2022)
The weekly chart continues to move sideways, with a bit of added volatility expansion over the few recent days.
With a strong and positive correlation coefficient of 0.89, BTC relates to large-cap stocks thoroughly. It makes Bitcoin vulnerable upon the dollar rally, more than not.
The primary bear market regime makes most medium-term upthrusts more vulnerable with chances to fail, which should trigger the traders’ cautious attention.
However, the range pattern has been developing since June, so the chances are that a significant breakout should come sooner than later – the one to potentially break into the new bull market.
The 200-week average shows a resistance anchor closer to the 24000 USD level, while the 50-week mean is 32185 USD. Both levels could be used as approximate objectives where traders would anchor, and prices can gravitate toward it.
The ultimate confirmation to validate a new bull market is to break over the 32185 USD.
The middaily chart reveals a local sideways move following the upside breakout.
The CTF Trailer remains on a bullish note, and as long as BTC maintains the 19827 USD support level, the bulls hold the upper vote, and the chart favors the buy side more.
However, a failed breakout at 21000 USD brings chances for a reverse move toward the said support level.
It is possible BTC tests the support with whipsaws and slips underneath. Still, if only the daily sessions close above the 19827 USD level, the bullish tendency is defended with better odds to develop higher.
The MTF outlook suggests a sideways pattern will likely unfold over the following days.
The BPRO Momentum Bands suggest the average volatility expected for BTC is within the 19800-21500 USD range, where the low-end support matches the 12H CTF Trailer Stop.
It also implies that no explosive breakout should occur as long as BTC moves between 19800 USD and 21500 USD.
Therefore, for BTC to continue to move higher, the condition to meet is a daily close above the 21500 USD threshold. Until that happens, traders can expect oscillations inside the range.
Even if BTC slips below 19800 USD, but manages to climb above before the end of a session, this maintains the bullish thesis for a longer tail to develop to the upside.
BTCUSD Annual Seasonality
Over the course of the past 10 years, the Bitcoin’s average seasonality study implies a strong finish of the year.
The most promising expectations are lined up for November, as it historically yields the highest returns of the entire year.
The average seasonality curve reveals the seasonal price pattern for BTC to develop upwards towards the end of the year, as it shows the % price changes indexed to 100, on the detrended data.
Interestingly, it yields 70% winning chances for the November to be bullish, based on the historical records over the past 10 years.
As the fear index is at 31 points, the fearful environment remains active.
Historically, positioning counter the extreme market sentiment performs quite well over longer period of time.
Contrarian investing approach would suggest that the current sentiment prints are still acceptable to expect upwards reversal, however, they are not as good as they were a few weeks ago, closer to 18000 USD floor.
Overall, the chances for an upwards month are pretty high and promising. But, traders should apply caution.
Hope it helps. God bless.