Daily Report – Bitcoin and Market Update (September 11 2021)
My recent report has been being proved correct so far regarding the thesis of market moving inside PTSD range 43-49k. Two local major levels important from the technical point of view are 46250 and 50402 which are marked in the chart. The lower is an ex-support which now is being local resistance for bitcoin along with aVWAP 46835 confirming that this is the average fair price of bitcoin based on volume ever since the flash drop came in. It seems logical then, that once 46250-46835 zone is cleared safely by bulls with a decent daily/weekly close above, then the next resistance should be the said 50402 which Im expecting to be retested eventually in the upcoming days.
As the crowds have just caught up with fearful sentiment (fear/greed ~30, lol) this also confirms my thesis from a couple of months ago saying that the entire impulse from 28-30k area to 53k highs was just first upside pullback relief, not an ultimate final pump of the bull market. I also said that the crowds had to fear again for the market to become good buy opportunity, and look – 2-3 months later here we are.
(…) Additionally, another confirmation behind my old targets for support given at aVWAPs crossover 42-43.6k zone which exactly happened. Why is this important? Well, we have just seen perfect example of mean reversion and everybody who resisted and rejected my numerous sure suggestions to keep locking in the profits before it’s too late, they’ve sadly let 20% unleveraged profits go just like that. Prices always oscillate around their averages and there’s nothing you can do about it other than buy the mean reversion or sub mean reversion levels (the lower, the better) or refuse to take profits at high upside deviation against the average/fair price of bitcoin. The latter never works out well.
Note contracting consolidation of two aVWAPs where the 21st July anchored one at 43634 is the more significant one as it reflects longer period. Then we have a stronger support aVWAP and short-term vulnerable resistance aVWAP at 46835 which both seem to conjunct from the opposite directions. This additionally proves the thesis of PTSD range as it “traps” bitcoin to move between the said boundaries in sideways.
That is my bet for the next days for bitcoin, sideways between the core levels 43634 and 46835 and following breakout towards 50402. Condition is that fundamentals do not change – no economic factors to disrupt the global markets, wars, military escalations, black swans, etc.
Finally, whenever we get high above 53k, 59580 is perfect resistance on bitcoin’s way to new ATH
Other than this, by analyzing Bollinger Bands presented in this very chart, one can notice that the drop was of abnormal volatility as the 42-43k down candle shadows were standing outside the lower Bollinger Band which marks the floor of regular average volatility (2 StDev below its 20-period average). As long as bitcoin trades below or near it’s floor volatility level defined by lower Bollinger Band, it’s a better buying opportunity than it is for selling.
Also, note the momentum&trend reset per Birbicator on the bottom, which is almost complete. It will take a few more days but eventually, the trend would be reset enough inside the oversold area below 20 points on the scale, signaling perfect buying moment
Let me quote back my latest 4h chart analysis:
“MTF chart shows a hypothetical concept of my PTSD projection which would reflect classical behavior of bitcoin’s market right after unexpected crash or news selloff events occur.
First phase typically is about very intense and broad volatility with very high risk. It’s NOT suggested for scalpers or short-term traders to traded intraday swings because the market is highly unstable and lacking the trend. For that, you should expect irrational, not “technical” movements where no patterns, movements are really predictable and come true as you could expect them to do based on regular TA readings. After the market and people have realized what has just happened – some people woke up to liquidated accounts which is always about denial – the PTSD phase II starts.
Phase II of PTSD range is imo about market recovering and reverting back to its means. Clearly, 47.6 and 49.1k can be used for reference as resistances backed by volume of the selloff. In case these ones are breached with decent close of 4h or higher candle over that resistance, the next is the said pre-breaker setup for 50402-51000 retest which marks the fakeout zone above as distribution place.
Phase III is when the market slowly recovers its “technical” features and TA applies better back again. That’s when you could trade BTCUSD more safely.
Until then, PTSD stands for range Post Traumatic Stress Disorder period as I refer to it. As any other range, it only trades outside the boundaries, not inside where its lacking the direction by definition.
As any other range trading setup, you may apply one of the three strategies below:
- Inside Range Trading : buy the range lows, sell the range highs
- Outside Range Trading: buy the upside range breakout (or retest), sell the downside range breakdown (or retest)
- Do not trade the range at all
Most of you would probably do best if no range trading at all is applied.
Notice and refer back to my reports, where I kept repeating over and over again how the market was only seeing the first impulse with the upside pullback and that the next short-term FEAR period for the crowds sentiment was due to come fast. We’re there now.”
UPDATE: The chart is following clearly the PTSD thesis as described above. The plan given recently in the report stands valid, obviously. Nothing else to add on top of it other than 46.2-46.8k being local resistance zone confirmed by local recent reversals.
On last Wednesday I brought the description quoted below:
“Crowds have started to fear back again. Wait through the PTSD zone accordingly as the crowds get more and more fearful. The moment you see fear/greed index in the fear or extreme fear zone below 30 or 25, that’s the best time to buy based on sentiment. Follow at your own will.
I was talking about this sentiment switch after first extreme greed impulse back in July. Scroll back if disbelief.
Remember, crowds are always right in the middle of trend but always wrong at the extremes.
UPDATE: As one can tell, we’ve just come at the place I described for the fear/greed index levels signaling decent buying opportunity. Now at 31 points on the scale, imo it’s a decent buying time (note that time and price are different matters and you analyze it differently). I would still expect low 20s on the scale, while the moment you get 15-20 regions – well I would not be able to suggest better buying opportunity than it would get at that point. Remember, crowds are always right in the middle of trends and always wrong at the extremes. The closer in the extreme fear we dive, the more wrong the crowd is.
Also, for everybody who missed my yesterday’s webinar where I explained bitcoin, alts, defi, trading principles, contrary opinion and more, please catch up with the link below