Happy New Year
First and foremost, Happy New Year to everyone. 2022 was a year… great for some, painful for others. Global Macro Economics are in a rough state to say the least and geopolitical events, natural events, shortages, etc continue to pile up on citizens of all nations. Regardless of whether you had a good 2022 or a bad 2022 – take a deep breath because IT’S OVER and it’s never coming back. Now, let’s look forward to 2023 and the 365 days of possibilities that lay before us all.
It just so happens that New Years Day for 2023 landed on a Sunday, traditionally the day we recap Bitcoin on a week by week basis. This article will take a different approach as we look to see what 2022 has chiseled in stone, now that the Yearly Candle has officially come to a close.
2022 closed as the worst year in Bitcoins history when looking at the Coinbase chart from 2014. The year Opened at a price of $46,211 and Closed at a price of $16,530. That equates to a loss of $29,680 per Bitcoin (almost double the current value), which is a percentage loss of 64%.
In the most crude of all technical analysis, a simple line drawn from the 2017 Yearly Close would paint the picture of a very simple Break and Retest scenario. This would be a highly common scenario in all trading but generally relocated to much lower timeframes. That being said, we have a yearly level laid out in front of us and that level is $13,863. Some of our analysis indeed points to further downside for Bitcoin on current levels and some analysis calls for even lower than $13,800. However, all analysis from other timeframes put to the side, $13,800 is the level that makes the most sense on the yearly.
Another great way to look at the larger view of Bitcoin is by using monthly candles. This chart allows us to see the daily candles within the much larger monthly candles so you can actually see the price action that makes up that month. December closed red, as expected. The big news here is that Bitcoin did not test, nor breach its November Low. This is a positive sign for some analysts as they were thinking the minimal activity because of holidays and such would be an easy way for Bears to rip the price floor down. Instead, we see that Bitcoin has maintained that November low for the moment.
It’s safe to say the “Santa Rally” never came and Crypto lovers around the world got nothing but a steaming pile of coal this year. Be that as it may, the selling pressure has indeed tapered off for the moment.
The worst part of this action is the break of the $18,100 – $18,200 zone. Unfortunately the break was retested twice during December and both attempts resulted in resistance. This is a telltale sign that we have more pain to endure before the Bulls can gain momentum.
The Bitcoin Weekly chart is most certainly in favor of the Bears taking another round in the swimming pool. The very large Weekly triangle shown on the chart has a Measured Move for a price target at around $10,600. As we mentioned earlier, we have analysis that includes testing and trading lower than the Yearly Level discussed above. In fact, the Yearly Level is so good that it is only off by $5 of the 2019 Swing-Fail level of $13,868.
The retest we talked about earlier is confluent with the back test of the triangle after the fallout of support. This is another classic Short Trade scenario that carries little risk when traded properly, especially being so close to the Apex of the triangle. Short Trades here would cover between $11,500 and $10,500. If we are to travel down that low, that is where we’d be expecting buying to pickup.
The closer you zoom in, the more you over analyze the price action, which leads to more confusion and more possibilities. That being said, we do have price action that support a potential upside move. Granted, this is deep within the confines of a much larger downtrend. The confusion starts with the overselling and massive drop in early November. This created a situation in which price drastically reversed course and went positive after a massive negative. This would generally count in pivots while numbering a trend. If that is to be true then we have to consider the break of the trend as valid, if only for a quick second in the middle of December. That action invalidated the count and the downtrend if using the outlier candles.
Now, regardless of the larger trend, we still have price action attempting to make an uptrend. These reversal areas can be seen in Green and labeled 1,2,3 respectively. The magic happens in the GREY area. Trade below grey and your uptrend is invalidated and the downtrend moves to larger price action swings and continues its course. Trade above the grey box and all of a sudden, we have an uptrend that would be targeting the $20,500 area. This is significant because more often than not, months go by before people even realize we have entered a Bull Market scenario.
Don’t get me wrong – this is a huge area that encompasses a ton of price volatility. However, this is the area to watch to get a better sense on the future direction of Bitcoin.
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