Daily Report – Bitcoin and Market Update (October 4 2021)
The weekly candle closed as a strong bullish bounce-back candle with solid bullish reaction off the near-MA50 lows. I’d consider the mean reversion to be complete at this stage and – right or wrong – I’d not necessarily wait eagerly for another retest before a lift-off which may happen at any time in my opinion.
You probably have also noticed I’ve slightly adjusted the forecast squiggle representing potential expected path bitcoin’s price would follow in the next months. The adjustment is justified by amending only the upper diagonal to account the most recent 53k highs and hence give reliable trendline which with the third attempt of a breakout would point at 50.5-51.5k resistance area. This is to represent more accurately earlier breakout signal when the trendline breakout occurs. The overall concept remains the same in its assumption that the final leg up is coming followed by the blow-off top. It’s also to clarify some confusion about 35k retest which the old curve was “pointing at”. In other words, most of the people over interpret the power of the forecast and expect every micron of the squiggle drawn to match actual price movements. Taking it too literally (which majority of people always do as if I had a crystal ball) and not paying too much attention to my market reports, videos, webinars, etc. could make them not realize that I called the correction complete at this point. Just like always, it’s impossible to predict every single move with 100% accuracy and pinpoint exact price reversals, but provided that no FUD, unpredicted black swans like military conflicts, global economy crash, financial crisis, pandemic, etc. occur, the market should not see a deep retracement below its 50-week average and is rather expected to show off strength starting from October.
Birbicator on the bottom has just flashed a bullish momentum crossover early-signaling the consolidation period inside coming to an end. At this stage, the lower triangle diagonal placement is NOT to be taken literally and rather just there to give you a picture of a chart pattern.
One way or another, the pattern base is 65k-28.8k equals 36.2k which if added on top of a breakout level 50.5-51.5k could potentially line up with a projection of bitcoin’s triangle target at 51.5 + 36.2k equals 87.7k.
The daily chart shows yesterday’s daily close to be of a local fake-out candle which risks bitcoin retesting the demand zone 43.7-45k in case of a daily close below local range lows at 47k.
Volatility-based resistance is determined at 50.3k by the upper Bollinger Band showing 2x StDev distance over bitcoin’s 20-day average. Currently bitcoin is over its demand zone and closer to its upper band rather than volatility-based support at 39.5k defined by the lower Bollinger Band (2x StDev below bitcoin’s MA20).
Note that the aVWAP anchored at July’s bottom is now displaying support at 43819. The direction of the mean is horizontal/flat, which suggests that ever since bitcoin bottomed out on July 21, bitcoin’s on average moving in horizontal movement. This tells me that bulls are yet nowhere near strong as they can get in a properly trending market. For now it’s just like a teaser of complete dominance and bears annihilation coming with the upcoming Wave 5 of the bull market. As long as bitcoin is moving in sideways on average, the chart patterns, trendlines are more likely to cause false breakouts and have bit less reliability the way I read it. Rapid throwbacks to the mean (mean reversion) must NOT be crossed out of the list just yet. In case of an unpredicted FUD news, the price may take a dive into 43-44k regions due to bots and algorithms reacting immediately with sell-offs.
Having the above said in mind, there are a lot of points in the chart signaling the bullish strength and market wanting to advance higher. It’s not bearish at all, but it doesn’t mean one should immediately forget about 43-44k losing it off their horizon.
The middaily chart is showing a powerful breakout thrust candle followed by a local consolidation with spinning top candles moving in a sideways between 46.8k and 48.5k. Even if it retraces down to 45k, it still would be considered healthy reaction past nearly 20% move up in past few days. Nothing goes up or down forever. The market takes turns due to demand & supply fluctuations between oversold and overbought periods.
So far, the volume-based moving averages suggest the entire demand cluster to be between 42.3k and 45k and shorting/selling into this region would be considered bad risk/reward. There’s also a floor support 39.3k based on 50-week moving average which should work as ultimate bottom in case of an unexpected FUD news.
Knowing we have seen a massive breakout over the downtrend dotted, it’s logical at least local consolidation period within bounds is to be expected. Usually what comes after massive thrust breakouts is a pennant/flag pattern but truly whatever pattern is formed what matters is the base size between its high and low that defines the next targets.
While aiming at 50k+ levels, 45k is also on the table and there’s nothing wrong with it.
MTF chart is showing one and the same range between 39.5k and 53k. Now bitcoin is getting nearer the supply zone 50-53k and while having the chance to visit its MA200 levels at low 46000s or MA50 at 44.8k, the overall direction seems to be well set by the most recent upswing off the 40k lows. Remember that the failed patterns/breakouts tend to perform better than the regular patterns which adds to the thesis of eventual breakout above the supply zone. This would lead to 58-60k retest.
Other than this, because it trades inside the range, it’s worth reminding 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.
Hourly chart shows a local fakeout over a well established level 48834 additionally empowered by a local range fakeout 48.5k. This suggests that so far 48.5k is where the local bearish territory starts and as long as it is not reclaimed with a daily close above 48.5k, this bears the risk of bitcoin retracing down to 45-46k zone backed by MA200 and VWAP defined by the volume profile. Worst case is the lower volume shelf 43-44k but that would require some liquidity engineering and FUD news coverage imo so unless that happens, Id not expect any lower prices than 45k.
Eventually, Id expect the orange path over the range to realize towards 58k once the said daily close over 48.5k is checked.
So far, the fakeout on the top suggests the opposite direction towards 45-46k to realize and for that you should be ready. It’s always better to be safe than sorry in financial markets. While looking up, be ready for corrections.
Bitcoin: Number of Active Addresses (168h MA)
Just like glassnode explains, it is the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted. Interesting hint I’ve spotted is the hidden bullish divergence suggesting upper trend continuation. It comes from a fact that the market’s price is lagging behind the Active Addresses trend – note how price is nowhere near its peak price of Sept 7th, while the average Active Addresses has already breached through its Sept 7th peak. I’m reading it as behind-the-scenes bullish tendency which somehow is not yet reflected by the price of bitcoin. The hidden bullish divergence also comes under the lower lows on price at the end of August and higher lows from the orange mean. Hidden bullish divergence suggests a continuation of a technical trend which started at 28.8k lows in June-July period.
The index at 54 points is read as neutral sentiment of the crowds. Crowds are always right in the middle of trend but always wrong at the extremes.
The herds were wrong at 40k lows labelling that as ultra bearish when the market sentiment was in extreme fear. Now they’ve realized they screwed up and after getting liquidation notice most likely they’re slowly preparing to long into resistance areas.
As one may guess, we are mid the trend right now, which is why I would not dare to counter trade or fade the local trend direction, which is upwards. Only when it reaches to the opposite edge of extreme greed is where I’d consider taking some profits off the table. More insights as always are explained in my exclusive video report unavailable to public.
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