Daily Report – Bitcoin and Market Update (February 5 2022) – The Birb Nest
HTF 12H:
The middaily chart is showing probably the most important occurrence for bitcoin over the course of the last 3 months, in my opinion. Here’s why:
Primarily, we have just seen the first successful breakout over bitcoin’s CTF Trailer resistance ever since the entire correction started off of the 69000 USD peak. BTC had had numerous attempts of breaking through this dynamic support but each and every single one failed – until yesterday. The importance of this powerful breakout is great. From now on, the bulls finally had got enough power to close a very strong candle through the main resistance.
Candlestick forming the breakout is a very strong instance where the essential breakout level got overshot by quite a decent percentage. The distance of the close of the day to the required breakout level is decent enough to make this breakout relatively trustworthy. Additionally, one can observe that the entire session was effectively dominated by the bulls, because almost entire range of the day is covered with bullish candlestick real body. The body wraps around almost the entire session’s volatility defined by the 37.3-41.7k USD range. It means that the bulls controlled the price action wholly.
Now that the CTF Trailer has flashed the “bull” note for the first time, it implies that the longs have the upper hand for bitcoin’s price action as of now with a CTF Stop at 38500 USD. Hence, it’s worth keeping an eye on the upper targets given automatically by the BPRO as follows:
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Naturally, those levels will likely not be offered by the market immediately or in next hours or even next few days, but over the medium-term perspective I am expecting the price action to move into this upper territory indeed.
MTF 4H:
MTF chart reveals a visualization of how powerful and significant this bitcoin’s breakout is based on the technical analysis principles. There are several reasons for it.
Notice how the breakout candle took bitcoin outside the regular volatility range defined by the BPRO Momentum Bands. The breakout occurred when there was the first successful break and close (!) above the High Band. It was additionally backed by another following candle closing outside the volatility range and even higher than the prior breaker candle. It is a healthy sign of underlying strength from the bulls.
Moreover, CTF Trailer marked another bullish break through the prior 4H bearish warning which took bitcoin down to 36300 USD. Now short-term bulls have the upper hand as long as CTF Trailer Stop at 40151 USD remains unbroken.
The BaseLine average is up-sloping quite aggressively (great steepness) and based on the mean reversion principle it implies additional level of support added at 39800 USD. Both levels 40151 USD and 39800 USD now create a cluster of supports – a demand zone.
The Level Lines suggest automatically adjusted resistances and support levels accordingly as follows:
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LTF 1H:
The hourly chart is showing a set of indicators given by BirbicatorPRO. Several conclusions might be taken here.
Firstly, the demand and supply block visualizations reveal a brick-like demand zone given the recent price action pivots. The demand is spreading technically between 39.5k USD and 40.6k USD. It means that in case of local breakdowns in the price chart, bitcoin would be likely to head towards the demand zone given above and could be expected to bounce strongly within that exact area.
Potentially, the strongest level within the said demand block is defined by the HTF Stop at 40023 USD
Local support is given by the previous highs reclaimed at 40900 USD. It suggests that in case of a break below the local BWAP block support (orange box at the top of the chart) at 41.5-41.6k USD, the next downside target is the mentioned 40900 USD and the demand block below it.
In case of an unexpected breakdown induced by the fear factors coming from the outside of the crypto market, e.g. wars, military conflicts, pandemics, catastrophes, etc. BTCUSD could find support lower at 37.4k USD level and invalidate the recent breakout and technical strength of bitcoin.
FEAR/GREED INDEX
The breakout on the fear sentiment side aligns with the breakout on the price action side. Now, with the index at 33 points on the scale, bitcoin has reached the most “bullishness” it has got so far since 2022 started.
Naturally, the breakout on the sentiment scale is backed by a strong breakout to the upside in the price chart, which improves the sentiment as the extreme fear longs are feeling safer, more certain and the bears have become grounded for a moment. The fear means that there are high chances that those who kept shorting the 36000 USD or lower areas aggressively, now will need to cover their shorts and accept their losses. Otherwise, such shorts will eventually get squeezed, just adding fuel to the bullish fire.
It seems that unless an unpredicted price shock occurs, bitcoin should continue the upwards price action to unfold as the reversal has been technically confirmed. The higher the bitcoin goes, the more FOMO bitcoin will likely experience and the more upside growth should be ahead as the result.
Crowds are usually wrong at the extremes – so far, it’s nothing but confirmed just another time, again. The herding effects also cause the retail participants to fight the trend counter trading the momentum (the money flow), while for now it is upside-oriented.
Bitcoin is still at -40% discount off of the top and with such a bullish trigger, I would expect a lot of herding effects and FOMO getting induced in the market. This could potentially take bitcoin into 50000 USD areas sooner than later.
More details explained in the video report!