Daily Report – Bitcoin and Market Update (October 22 2022) – The Birb Nest
HTF 1D / 12H:
The higher time frame charts show a significant contraction in terms of volatility.
BTCUSD has almost stopped moving, except for local noise on both sides of the 19000 USD level.
Typically, a more explosive move should be expected after the less volatile period as a significant level breaks. In this case, a clean break out of the descending triangle pattern could indicate the volatility increase in the breakout direction – provided that the flight is confirmed by percentage move, daily or weekly close outside, and volatility increase.
The chart pattern breakout objective reaches as high as 23600 USD to the upside. At the same time, the downwards target is 14400 USD.
Otherwise, based on the mean reversion concept, the 200-day mean paints resistance at the 25500 USD area.
Trend-wise, the CTF Trailer maintains the bearish tone, as BTC struggles to surpass the 19720 USD threshold to validate a local break and sentiment change. If it fails to climb, the bears have the upper hand in the market, laying out better odds of continuing downwards.
MTF 4H:
The MTF chart gives a more detailed look and an actual instance of what noise means in the markets.
Chaotic moves without preferred direction are what the 4H time frame paints for BTCUSD, as the traders swing back and forth, centered around the 19000 USD.
Recently, the Bitcoin price has shown two cases of bullish divergences detected by the BPRO Divergence System.
About 70% of the time, when BTC moves sideways, the divergences will work with reversal tendencies, informing about overextended trend sentiment on a low time frame basis.
As long as BTC trades over the 19100 USD level, the chances are it will continue toward the prior swing high at the 19800-20000 USD zone.
Otherwise, a downwards break following the top failure may extend the move to the downside, toward the low or mid 18000s USD area.
FEAR/GREED INDEX:
As the sideways pattern develops, the sentiment has worsened slightly.
Oftentimes, it happens because traders give up on the endless pattern and withdraw from their planned trades, which worsens the overall expectations and set traders more in favor of their loss aversion and impatience. They will choose the risks of not being in a trade anymore, just to avoid the prospect of admitting the loss.
At 20 points on the scale, the sentiment is rated as “extreme fear”.
On another note, the NUPL ratio proves net unprofitability at the slight levels.
The ratio value is approx at -0.11, which confirms the market is in the state of the net unrealized loss.
However, it may as well get steeper and deeper on the negative side of the ratio values, like it historically did while forming the major bottom patterns, following the selling climax.
While the crowds seem to be giving up on the Bitcoin’s sideways pattern, it may have the self-fulfilling prophecy effect on the BTCUSD, as the major support at 19000 USD gets weaker, with a more explosive move to the downside – potentially.
Better to be safe than sorry.
Personally I’m on the sidelines.
Hope it helps. God bless.
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