Weekly Recap – 02-06-22

Price Action

Weekly Winners - Peak Gain

Weekly Losers - Peak Drop

Another week in Crypto and another unbelievable story to tell.  This is all too often the case and the rollercoaster we know as Bitcoin continues to mess with people on a Daily basis.  Let’s briefly discuss the market overall.

Nearly all of our Top-20 or so coins are making a short-term recovery.  This is the recovery we were looking for.  From low timeframe up to hourly we are seeing some strong reversals and strong trends trying to form.  Note that this is not Long-Term yet and this can very easily just be a relief bounce, which, in the case of a downtrading market can trick a lot of traders.

One thing that can trip up a lot of traders is anticipating a big move and trading with those emotions before ever getting confirmation of trends or confirmations of reversals.  Reversals can be tricky as their is almost always just another area of resistance coming up.
We’ll break more Altcoin talk in the Weekly Alt wrap up and we will continue on with a more Bitcoin focused approach from here.

Correlation Matrix

Because we are going to focus mostly on Bitcoin in this article, this gives us the chance to see what is highly correlated with Bitcoin and what is not.  By no surprise at all, ETH is the most correlated at the moment with Bitcoin registering an .85 on the scale.  The least correlated at the moment is XTZ at .51.  The rest of the coins on the list fall mostly around .76.

Crypto FEAR and GREED

The Good ol Fashioned Fear and Greed is always relevant.  This sentiment tracker helps people to get a pulse on the health of the market in 5 seconds or less.  

Last week the Fear was down to 20 while it was half of that a month ago.  Do you remember all the fear in the market?  Yes, of course you do because everything was dumping.

We are currently at 40 which is way up from 20 and lands in the Yellow which is simply Fear and not Extreme Fear!

Daily Bitcoin Volume

Volume is curling down at the moment but there are some decent and healthy candles in the mix.  The overall volume is ever so slightly on the rise.  This is good and bad.  An increase in Volume while price is trending down would generally mean you expect continuation.  The same is true the other way.  We have been trending down now for awhile so this is something to keep in the back of your head.  Increased sell pressure can be the difference between holding a level of Support and breaking it.

Bitcoin Dominance

Dominance has indeed backdated the long-term downward sloping resistance level after breaking through it last week.  The confluence with the older horizontal support level looks like it helped out a bit as things did get dicey for a minute there.

Now with Bitcoin trending up, which we’ll talk about in a minute, Dominance all of a sudden gets more and more interesting.  This dominance can have a negative effect on Alts if traders start to sell off their Alts to pile into the BTC Train.  That has not happened yet.

Bitcoin CME Futures

They create them, they fill them and then they create some more.  The cycle continues forever.  We have a bit of a mess in the 36-38K Zone as some zones got filled while other are fresh.  

The current move on BTC now has started to actually fil an older Gap around the $41K area.  The Big Gap remains at 53K and that is the area of interest for any Gap Traders.  Those traders are still looking for that gap to get filled and they are expecting all the lower gaps to fill on the next dump.

Bitcoin Monthly Red/Green

If we are looking for a repeat of the last leg then we just finished the third Bearish Month in a row.  Of course, we look at a lot of metrics and fractals do come up from time to time.  Unfortunately the older price action would require another two months of consolidation and sideways action, which is still very much on the table.

As for now, we are six days into the month and we actually see Green.  It is far too early to call anything but the market could use a couple green months about now.

Bitcoin Weekly S/R

Well, well, well.  Look what we have here on the Weekly chart.  What we see is a touchdown to $32,933 and a relatively good buyback on that Weekly wick from two weeks ago.  Last week, Bitcoin sealed the deal for a $4500 Weekly candle that did 3 very important things:
1: Broke through and closed above the $41K Horizontal Zone.

2: Break and close above the internal trendline from the previous ATH and the first leg of the impulse move that was part of the run that created the new ATH.

3: A push off continuation and confirmation that he wick touch at $33K was bullish in nature.  

These three things help traders make decisions.  They start to put more confidence in long trades and less confidence in short trades.  Be that as it may, we have a ton of overhead resistance.  Major resistance starts at $45K

Conclusion

Trendline Breakouts don’t always workout but they workout far more often when you breakout with a very big candle.  Bitcoin did just that last Friday.  This candle alone went for a closed deal of $4284.  Much larger than anything in the previous days/weeks outside of the Dump candle on January 21st.
The fact that the two following days were able to grind their ways through the heavy resistance at $41K tells a pretty compelling story.  
This could be the short-term relief trend we are all looking for and it can also be the suckers rally.
Regardless, we are in a downtrend and we are short term trying to challenge that trend.  If Resistance holds then expect a wild sell off – if resistance breaks then we look for the next major zone.  $44,500 is the first major level of resistance and trend breaking.

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