Daily Report – Bitcoin and Market Update (June 1 2022) – The Birb Nest
HTF 12H:
The middaily chart continues to move within a narrow range-bound movement following a short-term outbreak to the upside.
Therefore, BTC is noting its first CTF Trailer Breakout in a longer while. This implies that the bulls have re-gained the control over the market and should have the upper hand, decisive vote for the market directions.
This suggests that the supports should be more likely to be had, and the resistances should break more easily.
The CTF Trailer Stop is at $29669.5 and as long as this level is defended against a daily close below the bullish trajectory should be more likely to arrive.
If the upwards trend sustains with a sequence of higher highs and higher lows, I would argue that the next major resistance area is at 38-40k USD.
MTF 4H:
The MTF chart suggests a mild volatility breakout, accounting for the upside trajectory of the Momentum Bands.
As the BPRO suggests, the current area of interest for BTC medium-term traders occurs between the 29000 USD Low Band, and the 33000 USD High Band. Bitcoin is likely going to oscillate between those levels in a more or less volatile way, and it still be considered “healthy” or “natural” based on the volatility.
A proper breakout through the 33000 USD region with a daily reclaim over it, and the BPRO Level Lines suggest that the 38-40k USD zone should be reachable.
The main support area given by the Low Band is also cross-confirmed by the Level Line indicator at $29196, adding more validity to the area.
Furthermore, the Level Lines resistances could serve as price objectives for the bullish setup, and they are as follows:
39693
37647
32268
These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement
LTF 1H:
The short-term picture of BTCUSD presents a local consolidation pattern stretched within the 31200-32400 USD zone.
A successful breakout to the upside would be a very rare occurrence of an actual follow-through to the upside, for the first time in a long while. The majority breakouts have turned out false in last months, exactly because there was no follow-through followed by a failure or trap.
Failed breakouts tend to perform better in the opposite direction than the one anticipated on the breakout itself. The promising trend, in such case, gets violently reversed out of nowhere with one larger strike, taking out over-leveraged futures contracts. Such a process involves “liquidity hunt”, where the whales or specialists allow to the market to breach certain key threshold, around which limit and stop orders aggregate. In order to acquire a larger position in a sideways price action, the whales often need to set traps for leveraged traders, congesting them around main support or resistance levels.
For this reason, a violent breakdown of the pattern could result in more violent move to the downside and another series of a few-week range price action.
The Level Lines define supports at following anchors:
30868
29840
29137
28471
These levels could be anticipated to serve as level-to-level references. In other words, when one level is breached, the next one in the direction of the movement
FEAR/GREED INDEX:
Now, that the extreme fear is still elevated with the index readings at historical lows, the contrarian traders can set themselves up for a decent return/risk position.
At 17 points on the scale, the extreme fear is still apparent, even after 25-30% bounce off the LUNA & UST capitulation lows.
The crowds are always right in the middle of trends and always wrong about anticipating reversals, due to undergoing cognitive biases (belief perseverence biases + information processing biases), as well as emotional biases (loss aversion, affinity, endowment, regret aversion, status quo bias).
The psychology and behavioral finance, prospect theory suggest that the biggest cognitive dissonance and representativeness bias factors are in the early stages of bottom reversals. As a result, the investors would rather stick to their prior beliefs regarding downwards tendency in the market, rather than going through mental discomfort from adjusting to the fact, e.g. that there have been unnatural run of losign weeks to the downside. Historically, this has been the first time ever that BTC printed 9 red weeks in a row. Such over-stretched market conditions are unstable and rather more likely to reverse than last for longer.
All above accounted, I have recently added six-figure amounts of dollars worth of BTC to my long-term positions.
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Thanks for reading. God bless.