Weekly Recap – 02-05-23
Top 5 by MCAP
Although this recap is mostly all about Bitcoin, it’s still important to discuss the overall health of the Top 5 as numbers 2-5 do have sway in the altcoin world. January was kind to Bitcoin and all the Top-5 coins. From an almost non-stop sideways or downtrending market came a month of buying pressure, increased volume and improved sentiment across the board.
Bitcoin Monthly - Long-Term
Long-Term Monthly outlook on Bitcoin now has the advantage of using a single bullish month to gather the attention it seeks to take a stab at a potential reversal. Many traders and investors were looking last week to see where January would end up closing. The results are in, and we are left with a 4-month high. This 150-day high break is special because it illustrates how sideways and bearish the market has been since last June. The next test is to trade over the August high and perform a pullback that will give the bulls some structure to work with in the future. January may have helped to wake the entire crypto market.
Bitcoin Weekly - Mid-Term
The Bitcoin Weekly chart shows an attempt to reach the next major Structure level was protected by Weekly Key levels posted towards the end of last summer. This $24,287 level has stopped all trading from getting near the Structure level of $25,214. It is incredible how some of these levels get respected, almost to the dollar, and this one is seven months old.
Regardless, the first of the two major levels was broken three weeks ago, and this slowdown in momentum could be an opportunity for Bitcoin to retest that level for Support. If that is to happen, we look for a drop-down to $21,478 or close, and we expect to see buyers lining up to purchase at those levels.
If Monday is to be a Bullish day in the traditional world, that could cancel any retest Bitcoin had planned and shoot for the $25K zone to break the major Structure level and flip it to Support. This does mean most traders will need to wait until next Sunday to find out where the Weekly candle closed and whether it is a sign for them to long the market.
Bitcoin Daily - Short-Term
As we can see from the chart above, Bitcoin is not out of the water just yet. Every piece of this puzzle is just as important as the previous piece. Bitcoin needed to break the level marked in a Green 2 in order to get any traders interested, but after that, it is required to break the local trendline to get day traders interested. Consolidating and breaking through the first structure level was enough to wake up longer-term investors but not enough for them to start buying. The break of the second interior structure level and the following confirmation is getting investors and traders salivating over the next move.
The reality is if Bitcoin fails to break the highest structure level, Bitcoin is likely to create lower lows than we saw in November, as the failed area would become the 3rd major position for a downtrend, which is a downtrend continuation from the November $69K ATH downtrend.
However, a break of the Structure level changes the game for downtrends, and for the first time in a long time, it will help to paint the picture of an actual reversal. A reversal that will try to climb the ladder of Fibonacci back to $69K.
Daily Bitcoin Volume
Volume for the previous week was down, and given the price action, this is not surprising. Most of last week was sideways as Bitcoin consolidated before the next move. During the 2019 Swing-Fail Rally, Bitcoin consolidated on the 200 Daily EMA. The current market conditions show that Bitcoin is consolidating just under the 300 EMA after impressively smashing the 200 EMA earlier.
Bitcoin dominance continues its rejection prior to 45% throughout all last week. The case to retest 42% gets stronger and stronger daily as the current rejection shows no signs of slowing down or turning around to break 45% anytime soon. The level at 42% is relevant enough to garner a retest, but this means that momentum in Bitcoin was not as strong as the price action initially lead traders to believe. This slow and painful drop in Dominance is evident that the market has all the time in the world to reach the desired levels.
Bitcoin CME Futures
Very rarely do we see the Bitcoin CME Futures chart look like such a mess, but low and behold, we have ourselves a mess of a chart. All previous gaps over the last few weeks have been cleared except the largest of them all at the $19,500 region. Most recently, we have seen wild fluctuations between Daily Open and Closes, as well as the Weekly (Friday to Sunday), Close to Open. This has left three small gaps in the last week alone, with a more significant gap from two weeks ago recently filled. This price action is unusual for CME Futures and may be related to longer-term positions that closed in January. Be that as it may, there is much work to do in this area if CME fills these gaps.
This week’s focus will be protecting $23K and pushing for $25K. All the current action around $23k is ok. It appears the Bulls are consolidating after the latest impressive climb they had. This consolidation allows the Bulls to catch their breath, establish a solid support base and gather the troops before the next significant advance. Where this tactic fails is when the momentum slows to a halt, and they fail to get retail onboard with the next major climb. The Bears will protect $25K as if it is their last stand… because, in some ways, it is.
The Bulls need to increase the price per Bitcoin by over $2400 a piece. From these levels, that is a nearly 11% gain. This becomes much more difficult as the Bears narrow their field of view. They will consolidate resources and band together to protect $25K, and it will take everything the Bulls have in store to make the attempt count.
IF, and only IF, we see a break of $25K; we need confirmation of that break. A flash wick on a one-minute chart will not convince investors that it’s time to rally. A break above early in the week with the rest of the week chopping around that area could open the doors to a flood of sidelined capital as early as next week.
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