BTC downtrend
GM everyone, as promised, the continuation of the report
HTF (Daily):
The high timeframe shows a firm downtrend for BTC with a diagonal trendline resistance in full force A breakout of the diagonal resistance would be a positive sign indicating that the bears are losing their grip Nevertheless, let s analyse the move since July, focusing on the volume. Last year rally (2021) was a phoney rally. What do I mean by that? It was essentially a fake rally because it wasn't sustained by volume. We can see that in July as the volume dried up from the absence of sellers the price started to pick up on a small increase of volume. This is typical of local bottoms. However, the volume has failed to pick up strength suggesting less interest by the participant, not much conviction. Instead of any retracement, we could see there was a strong spike of volume which was suggesting that bears were still strong and working in the background. We could see an increase in volume on the topping process. this is typical of big players, institution unloading their shares/coins on the enthusiasm of retail traders. This was a clear suggestion that a local top was due. If we follow the volume then we can conclude that the November top was in fact a local top which doesn't mean this was a Macro top but I would see it as a short term top. Back at the beginning of December when we had the massive sell-off to 42k I was suggesting that if price and volume weren't going to pick up momentum and strong break above 52k BTC would have seen lower prices with my short term target of 39-40k and final target of 30k. Looking at the Bollinger Band (BB) we can see there was a squeeze recently indicating strong volatility imminent with also the price breaking above the 20 MA of the BB to just shortly after breaking back below with a tower top formation, a bearish pattern on the daily. This suggested that bears had an edge on the market and although BTC looked ready for a bounce bears were still in control. Nevertheless, the real blow came when BTC 2 days ago effectively lost the 45500 support which was in force for the last 4 weeks his as previously talked gave a downward target of 39-40K by measuring the price depth of the recent rectangle formation. The recent breakout holds strong significance because BTC has also lost the 52 week VWMA which was working as support for the last year and a half and at the same time has lost the 200 day MA which is also a worldwide indicator used to assess the strength of an asset (below downtrend above uptrend) On this breakout downwards we also had a volume confirmation with volume increasing significantly without any sign of climax which suggests this was a valid breakout with possible downwards continuation. The price has also closed outside the BB lower boundary which once again suggests a follow-through of the trend. A daily close back into the BB will signal a possible bounce back to the mean (20MA) back to 46-47 k. This is now expected However the magnitude of the bounce, volume and market behaviour will be an important indication of whether we found the local bottom. Now considering the Horizontal support and resistance, there are 4 main levels to pay attention to: the closest ones are the September low at 39500 for support and the 45500 support just recently turned resistance. A break below or above this level will create a down or up continuation to the next support and resistance. The 2 most important levels at the moment are the support at 30k and the resistance at 52k. In my opinion, the 52k resistance is the most important level to reclaim before calling any possible bull run. It is an important level signifying the high of September and the recent top of the local head n shoulder that has pushed us down to 40k. Right now I am looking for a reaction from BTC expecting a retest of the 45500 level short term. A possible violation and follow through to retest the 52k level won't be bullish in my opinion, I will still classify that as a bounce relief unless the 52k is reclaimed. There is a possibility BTC could be forming a Daily head n shoulder with the neckline sitting at 39 and invalidation point at 52k. If the HnS is completed then the downward target will be 24k. Although this is scary is still a possibility, but is far in the future right now. Lastly, the Stoch RSI and RSI are in oversold condition and due for relief. In the RSI a clear downtrend trendline can be drawn If the RSI manage to break above with a good volume follow through then this may suggest a new rally may be started. However, I will eye the 52k level before thinking about any serious long.
HTF (Daily):
The high timeframe shows a firm downtrend for BTC with a diagonal trendline resistance in full force A breakout of the diagonal resistance would be a positive sign indicating that the bears are losing their grip Nevertheless, let s analyse the move since July, focusing on the volume. Last year rally (2021) was a phoney rally. What do I mean by that? It was essentially a fake rally because it wasn't sustained by volume. We can see that in July as the volume dried up from the absence of sellers the price started to pick up on a small increase of volume. This is typical of local bottoms. However, the volume has failed to pick up strength suggesting less interest by the participant, not much conviction. Instead of any retracement, we could see there was a strong spike of volume which was suggesting that bears were still strong and working in the background. We could see an increase in volume on the topping process. this is typical of big players, institution unloading their shares/coins on the enthusiasm of retail traders. This was a clear suggestion that a local top was due. If we follow the volume then we can conclude that the November top was in fact a local top which doesn't mean this was a Macro top but I would see it as a short term top. Back at the beginning of December when we had the massive sell-off to 42k I was suggesting that if price and volume weren't going to pick up momentum and strong break above 52k BTC would have seen lower prices with my short term target of 39-40k and final target of 30k. Looking at the Bollinger Band (BB) we can see there was a squeeze recently indicating strong volatility imminent with also the price breaking above the 20 MA of the BB to just shortly after breaking back below with a tower top formation, a bearish pattern on the daily. This suggested that bears had an edge on the market and although BTC looked ready for a bounce bears were still in control. Nevertheless, the real blow came when BTC 2 days ago effectively lost the 45500 support which was in force for the last 4 weeks his as previously talked gave a downward target of 39-40K by measuring the price depth of the recent rectangle formation. The recent breakout holds strong significance because BTC has also lost the 52 week VWMA which was working as support for the last year and a half and at the same time has lost the 200 day MA which is also a worldwide indicator used to assess the strength of an asset (below downtrend above uptrend) On this breakout downwards we also had a volume confirmation with volume increasing significantly without any sign of climax which suggests this was a valid breakout with possible downwards continuation. The price has also closed outside the BB lower boundary which once again suggests a follow-through of the trend. A daily close back into the BB will signal a possible bounce back to the mean (20MA) back to 46-47 k. This is now expected However the magnitude of the bounce, volume and market behaviour will be an important indication of whether we found the local bottom. Now considering the Horizontal support and resistance, there are 4 main levels to pay attention to: the closest ones are the September low at 39500 for support and the 45500 support just recently turned resistance. A break below or above this level will create a down or up continuation to the next support and resistance. The 2 most important levels at the moment are the support at 30k and the resistance at 52k. In my opinion, the 52k resistance is the most important level to reclaim before calling any possible bull run. It is an important level signifying the high of September and the recent top of the local head n shoulder that has pushed us down to 40k. Right now I am looking for a reaction from BTC expecting a retest of the 45500 level short term. A possible violation and follow through to retest the 52k level won't be bullish in my opinion, I will still classify that as a bounce relief unless the 52k is reclaimed. There is a possibility BTC could be forming a Daily head n shoulder with the neckline sitting at 39 and invalidation point at 52k. If the HnS is completed then the downward target will be 24k. Although this is scary is still a possibility, but is far in the future right now. Lastly, the Stoch RSI and RSI are in oversold condition and due for relief. In the RSI a clear downtrend trendline can be drawn If the RSI manage to break above with a good volume follow through then this may suggest a new rally may be started. However, I will eye the 52k level before thinking about any serious long.
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