Market Overview: Bitcoin

Bitcoin Double Top Lower High on the Daily Chart. This week was quiet, the price tried to trade higher but then reversed down from the 20-week Exponential Moving Average (EMA). On the Daily Chart, the price is within a Sell Zone of a Bear Channel and formed a Double Top Lower High, Bears are selling, expecting a short-term move lower.

Bitcoin

The Weekly chart of Bitcoin

Past: Supports and Resistances

• The price did a Bear Breakout of a Trading Range formed between early 2021 and early 2022.
  • Major Lower High.
  • Bear Flag Breakout Point.
• Then, the price continued to trend down within a bear channel until it reached strong supports and formed a reversal pattern: a HSB.
  • 2022 Low.
  • Right Shoulder Low.
• The Right Shoulder Low was followed by a Bull Breakout:

Present: Market Cycle

• Recently, there was a Bull Trend in the form of a Spike (broke the HSB) and Channel.
• A Bull Spike and Channel is normally followed by a Trading Range instead of a Bear Trend.
• Traders know that the Trading Range high is probably the actual 2023 high.
  • The low of the Trading Range will likely be around a Major Higher Low of the Bull Channel.
    • The Bull Channel began with a higher low at around $20000.
    • The first target is the minor higher low around $24750.
• Between $24000 and $22000 there is a Buy Zone.

Future (Inertia)

• The price it is likely to test the minor Higher Low at $24750.
  • Then, even if there is a bearish short-term continuation, the price will likely find buyers ($22000 to $24000 area).
• After there is a test of the minor Higher Low, the odds will favor a test of the actual 2023 high thereafter.
• If the price were to fall to the Major Higher Low at around $20000, it will need a strong bull reaction from there to avoid bearishness.

Trading

It seems like the weekly Bulls have better odds finding a Swing Setup than the Bears. So far, 2023 has delivered a couple of Swing for the Bulls, and none for the Bears (scalps only).

This week’s candlestick is not over yet (Bitcoin spot trades 24/7); so far, it does not look like a good signal bar for the Bulls, neither for the Bears.

• Bulls:
  • Last week we have said that the Bull Reversal Bar was not a good setup itself and that a good follow through was needed. This week is not a good follow through for a possible buy setup.
  • The best is buying a reversal up, surging below the minor Higher Low.
• Bears:
  • They prefer to sell high, around the 2023 high, rather than selling below lows.

The Daily chart of Bitcoin

Past: Supports & Resistances

• There was a Bull Breakout.
• Then, the price went sideways, forming a Tight Trading Range that broke slightly to the downside.
  • Tight Trading Range High (2023 High).
• Moreover, the price entered an endless pullback until did a Strong Bear Breakout. After a Strong Bear Breakout, we expected a Second Leg Sideways to Down:
  • Bull Trap and Lower High.
• Now, the price broke above a Bear Trend Line, but there is a latest one.

Present: Market Cycle

• Until the price does not trade above the Bears’ Stop Loss, it is still within a Bear Channel.
• The price created a Double Top Lower High around the top of the Bear Channel, which is always a Sell Zone.

Future: Inertia

• Since the price reversed down from the Sell Zone, it is likely to trade lower.
  • The target is to get, at least, until the Bulls’ Stop Loss.

Trading

• Bulls:
  • They should wait either for entering after the current thesis is over, or when the price reaches support and reacts.
• Bears:
  • They can probably sell below Thursday’s low, or below any good bear bar. Their first target is now where the Bulls have their Stop Loss.

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