The daily chart has shifted sharply to the upside and is now trading over the 200-day bear market trend. For the first time in over a year, it can be considered a sign of technical strength, not weakness.
There is persistence in going higher, unlocking higher highs and higher lows across the lower time frames, which may lead – at least – to short-term implications and upward momentum.
However, accounting for the significance of the 200-day mean, such a decisive breakout should not be ignored but perceived as a structural change inside the market.
The positive feedback loop and cognitive dissonance with conservatism bias will likely make traders hold on to their underwater shorts until liquidation, which may reinforce the rally even further.
HTF 12H:
The 12H chart printed the bull signal for the buyers at ~16900 USD with the help of the BirbicatorPRO trend system.
Ever since, the rally has been of exceptional strength and sloped vertically to the upside, accelerating the move. Such price behavior is typical for reliable trend breakouts, which come from structural market changes and shifting forces.
The bulls are in control as long as BTC trades and closes sessions over 20077 USD. This level is defined by the CTF Trailer as the invalidation stop-loss, which may slow the bulls down on the way up.
From the trend-following perspective, after an appearance of such a strong trend, even if the bullish position is stopped on the whipsaws below the critical stops, it should be re-entered (even if it’s higher) if the rally continues. This comes from the nature of trends, which are structured to persist in one direction. This persistence generates the best returns for those who move alongside it.
MTF 4H:
BTC is trading at 20800 USD, presently, and below a local supply cluster displayed in the candlestick chart.
The candle formations reveal longer upper shadows, signaling the selling forces at work.
The 21-21.2k USD resistance area matches the previous swing highs zone of November top.
Typically, whenever there is a rapid move up toward the prior resistance region, it will likely meet opposing forces at the price barrier at first. This is the case now.
However, knowing that Bitcoin reveals exceptional trending features occasionally, such vertical rallies should not be counter-traded. Otherwise, it’s as if one were trying to stop a massive truck speeding at 200kmph with their body weight. The impetus of the truck will make it run them over. The momentum or money flowing in one direction of the trend is like the truck.
FEAR & GREED INDEX
At 46 points on the scale, out of 100, there has been a profound change in the market sentiment. It’s risen sharply from the extreme fear depths toward a neutral print.
Typically, the more neutral the sentiment after a violent breakout, the more likely the market is to persist in the direction defined by the breakout itself.
The contrarians who positioned themselves counter the crowd’s fearful sentiment at the lows, are now in heavy profit.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
Definition reminder: “Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap. Assuming that the latest coin movement is the result of a purchase, NUPL indicates the total amount of profit/loss in all the coins represented as a ratio. It could be interpreted as the ratio of investors who are in profit. Values over ‘0’ indicate investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This phase indicates the increasing reason to take profit which leads to an increase in sell pressure.”
The NUPL ratio has turned back positive, signaling a significant shift on the on-chain side. The ratio is valued at approximately 0.012 presently, which suggests that, on average, the market participants are not underwater anymore, and they received a slight unrealised profit.
Hope it helps. God bless.
P.S. If missed my yesterday’s webinar discussing the $BTC breakout before it happened, see the link below.
The daily chart gives a little more detailed insight into the bigger picture of the BTCUSD price history.
It’s revealed that Bitcoin is now trading above its 50-day moving average, representing a bullish medium-term outlook, as the far right tail of the curve turns up, slightly.
The 200-day trend may work as an additional anchor for many investors, looking at $19500 for resistance. At first, whenever the price approaches the resistance, it may face a barrier of selling into the bids in that area. Besides, it has shifted the direction of the long-term trend, as the slope and pace of declines have decreased substantially.
Still, the $17500 area works as technical resistance. Once broken, it may reinforce the newly-shaped trend to persist toward the next area of interest at $19500. Also, breaking above 17.5k USD would also prove the bearish descending triangle concept to fail. Failed patterns tend to perform better in the opposite direction, then.
MTF 4H:
The medium-term chart suggests that the market directions are now much more upward-oriented.
While it gives no guarantee the prices will travel north, there is an average consensus that Bitcoin should likely move within a well-defined zone at $17000-17700. If the zone is broken to the upside, a more explosive and accelerated rally may emerge.
Otherwise, from the technical standpoint, failing to hold the support area at 17000 USD may contribute to invalidating the bullish 12H and 1D setups. Furthermore, this could cause the downside move to extend below the 16500 USD, or lower.
It would be owed to the phenomenon that the failed patterns which fail to follow through tend to travel more persistently in the opposite direction.
FEAR & GREED INDEX
At 26 points on the scale, out of 100, the “fear” is marked as the dominant market sentiment.
Still, there is considerable amount of pessimism in the market and the cognitive dissonance may build up even further if the prices rally higher, leaving disoriented traders behind.
The greatest amount of cognitive dissonance is experienced at the early stages of the reversals, as the new information conflicts the prior views of the market’s going down.
It seems to be well reinforced by the market scanner, suggesting that there is a strong bullish incentive on the daily time frame. Meanwhile, the weekly chart maintains the bullish momentum with the low time frames being filled with uncertainty and emotional biases confusing traders.
Overall, it seems that the market is starting to feel constructive about the ascend, and less bearish. However, Bitcoin is not out of the woods, as long as the market technicals suggest it’s trading below the 200-day average.
The weekly chart reveals BTC is trading below its critical level of resistance at $17500.
If the local breakout succeeds and the weekly bar closes above the level, further upside implications may emerge.
At 0.49, the 7-week correlation coefficient vs. $SPX confirms an increasing strength of the relationship between the prices of Bitcoin and large-cap stocks.
Currently, BTC is at a 30% discount vs. the 200-week mean, representing the long-term trend. Historically, it’s heavily deviated to the downside, below its “fair” price defined by the 200-week price.
It also needs to rise by approximately 13% to catch up with the 200-day mean.
HTF 12H:
The middaily chart reveals a bullish BPRO trend alert, marking increased chances of a new upward trend emerging.
The BPRO CTF Trailer signal suggests that the bulls are back in control over the market prices, more likely than not.
Furthermore, the BPRO CTF Trend system defines a Stop level of invalidation at $16934. As long as BTC trades over this level, the bulls are to dominate and decide about the short-term directions.
4H:
BTC is at the short-term resistance and boundary defined by the BPRO Momentum Bands.
At 17300 USD, BTC reveals short-term exhaustion, as the local bars seem to have loner upper tails, proving temporary distribution processes. As a result, Bitcoin may return to the breakout level at $16875.
The HTF Trailer (12H CTF) suggests that the bulls are in charge as long as Bitcoin remains above the breakout level and closes above it. Even if there is a local slip below the level, but prices come back above 16900 USD, the bulls will still maintain control, technically.
FEAR & GREED INDEX
At 25 points on the sentiment scale, BTC remains in the “extreme fear” environment. Even though there has been a slight incline of the prices, traders may experience the greatest amount of cognitive dissonance and undermine the significance of local breakouts, this way, as it conflicts with their prior beliefs.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
Reminder: “Net Unrealized Profit and Loss (NUPL) is the difference between market cap and realized cap divided by market cap. Assuming that the latest coin movement is the result of a purchase, NUPL indicates the total amount of profit/loss in all the coins represented as a ratio. It could be interpreted as the ratio of investors who are in profit. Values over ‘0’ indicate investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This phase indicates the increasing reason to take profit which leads to an increase in sell pressure.”
At -0.15, the NUPL ratio suggests that an average market participant is still underwater. Historically, the deeply negative NUPL ratio values marked the cycle troughs and proved great contrarian investment opportunities. This time, it should be no different.
Bitcoin Average Mining Costs
Per MacroMicro: “Through observing consumption of electricity and daily issuance of bitcoin, provided by Cambridge University, we can find out the average mining costs of bitcoin. When mining costs are lower than bitcoin’s market value, more miners will join. When mining costs are higher than miner’s revenue, number of miners will decrease.”
At the current production costs at $19200, the miners remain unprofitable, accounting for the mining difficulty and the electricity costs. It encourages more selling in the market, as some of the miners may need to close their business and sell off holdings to cover for outstanding expenses.
For the bulls, it would be best if the miners are back in the profitability zone, and above $19200.
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