The weekly chart has not displayed any significant instance of strength in the way BTC moves.
For the past few months, BTC has been moving nothing but sideways and between 17500 USD and 25000 USD marks. Recently, though, traders have been suppressed in the lower end of the range, which eventually brings the risks of a breakdown.
The 200-week mean (23792 USD) and the 50-week mean (32916 USD) can work as resistance areas on the way up.
The 7-week correlation coefficient has decreased substantially and broken out of the 5-month range of 0.5-0.95, a vital alert showing a weakened relationship between stocks and BTC.
However, the dominant primary trend is downwards.
HTF 12H:
The middaily chart continues to struggle over a break to the upside, above the CTF Trailer Stop at 19720 USD.
This suggests that the dominant medium-term outlook is focused on the sideways trajectory, which lacks a trend. This is not helpful to many new traders.
Overall, if the upwards breakout is not facilitated in a confirmed manner, the bears have the upper vote in the market, potentially setting targets downward at 14000-15000 USD areas.
MTF 4H:
Lots of noise is portrayed in the 4H picture.
The BPRO Divergence System has recently detected bullish divergence alerts.
However, there has been no follow-through to the upside (or to the downside) just yet.
Instead, the market oscillates between more or less fixed frames or boundaries, 18000 USD and 20000 USD.
As long as BTC remains within those frames, a more explosive moment is not expected to come, and BTC will likely continue to consolidate.
FEAR/GREED INDEX:
The ‘extreme fear’ saga continues, as traders are still giving up their hopes on the way BTC moves upwards.
Historically, whenever BTC remained for a longer time within the extremely scared environment, it rather gave good calls to the contrarian investors, who would be the mean-reversion traders – investing counter the trend, driven by irrational behavior of investors.
Now, at 22 points on the scale, the loss aversion populates and traders often decide to withdraw their positions or tighten the stops, which causes order clustering at specific critical levels.
If activated, a larger and more explosive/volatile movement should be generated out of it.
The vast majority of traders would do best if held tight and not overtraded the sideways period, to later not find themselves on the wrong side of the trend, when it finally develops.
Hope it helps. God bless!
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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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The weekly chart has added yet another bar to the bearish setup for the long-term chart.
As the last weekly session printed a new local low, it still remains within the 17500-25000 USD zone. Hence, within the larger downwards context, BTCUSD is now moving sideways. Typically, when such a case occurs, it may be more of a continuation pattern, than the reversal.
The 200-week average at 23478 USD may act as a resistance in the near term, whenever BTC would approach the level from the underneath.
Meanwhile, the 7-week correlation coefficient is at 0.68 vs the S&P 500 benchmark. This proves, still, strong and positive correlation between bitcoin and large cap stock’s prices. Hence, for seeking the BTC bottom, it makes a point to expect the large cap stocks to flatten out at first.
HTF 12H:
The middaily chart seems to be trading at the lows of the consolidation pattern, forming since the June lows at 17500 USD.
For the past days, BTC has remained on the bearish note, even since breaking down the 20500 USD support.
The CTF Trailer has been bearish-sided, following the disappointing CPI print for August. As long as it does, the prevailing dominance is shown by the bears.
Otherwise, the 200-day mean resistance at 28700 USD remains as the long-term breakout level, validating a new bull market.
Until the break comes, and for as long as the CTF Trailer leans toward the bearish side, BTC may well exceed the June lows – just like many stocks already did.
MTF 4H:
The MTF chart has chopped around the 19000 USD level recently.
BTC is now trading in the very middle of the BPRO Momentum Bands, which display the regular volatility range to be at 18200-19800 USD. It suggests the lack of traders’ conviction, and uncertain expectations about the direction of the market for the next days.
It is, because the market prices reflect and are driven by the anticipation of future prices, much more than the current conditions.
Until a break above 20000 USD, or below 18200 USD is confirmed with a daily close through, then BTC remains neutral and sideways and is likely to continue to chop around the middle ground.
LTF 1H:
The hourly chart is giving a deeper look inside the sideways pattern, as BTC chops around 19000 USD.
The pattern frames are given at 18200 USD, and 19700 USD areas. It suggests that as long as BTC continues to move within those boundaries, then the volatility factor is limited and promoting range trading and mean reversion – buy the lows, sell the highs.
By definition of it, BTC is more likely to meet a bullish or bearish divergence, as it approaches the low or the high area, which will encourage trend fading traders.
Bitcoin: Net Unrealized Profit/Loss (NUPL)
Kind reminder for what the NUPL ratio stands – find the quote below after Cryptoquant:
“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 is now at -0.07, which proves that many traders are with unrealized losses, and that the market seems to be more oversold or underappreciated than not.
Historically, negative NUPL values were present during the bottom reversals, at least in the recent BTC history. While it can not guarantee success in future, the history often rhymes.