Top 5 by MCAP
Bitcoin is making waves in the last few days. After a week of pushing and maintaining, Bitcoin was indeed able to close above the lower $20K resistance for the first time since the week of September 5th, 2022. This two-day pump between Tuesday and Wednesday of last week also catapulted the Altcoin market. We even see that $DOGE has pushed Cardano out of the Top 5 in Cryptocurrencies. So, is this it? Is this the beginning of the reversal? Well, it’s far too early to tell but we have some metrics that look very interesting. Unfortunately, if history has anything to say about it, even if this does reverse for a bit, most are expecting further downside.
Bitcoin Monthly - Long-Term
With the rise of Bitcoin over the last week, we are currently sitting on a green monthly candle for October and there are only 2 days left for trading before this Monthly candle closes. As you can see, July was the last green Month and most of September and October have been sideways. A green month does not change the fact that we are below the recent lower high but it does wake some traders up that would otherwise not be paying attention.
Bitcoin Weekly - Mid-Term
We are still sideways. Let’s not forget that or lose sight of the bigger picture. Bitcoin did put in a $2000 weekly candle which when zoomed into the Hourly, looks amazing, however, this is the Weekly, and it’s very easy to see that we have not exactly made any great strides. That being said, we are actually making some moves as we have broken and closed above the SUpport Zone from the 2017 ATH for the first time in six weeks. So what do we need to see? Support would need to hold. Trading above $20K adds confidence to the market but it’s not required to hold support. We are already over the long-term trendline, so we look for the failure point of the previous rally. The level to break is $24,287, but the High is actually $25,214. These are dangerous levels because once you pursue them, you need to make sure you have the momentum to break them, otherwise, all you are building is a Bearish Double Top.
Bitcoin Daily - Short-Term
Bitcoin Daily helps to uncover the WHY when it comes to resistance and consolidation. As we talked about last week, the green zone was the zone to get bullish for the short term. Bitcoin was able to push through that entire zone in only a few days. The yellow line represented the level we need to close over and maintain, allowing the Bulls to safely take a break after the 2-day push. That level is $20,479. Bitcoin has reacted well to those two areas and is now on its sixth day above that level. This is also the signature level to invalidate the downtrend on the daily for the local trend. As you can see, this is the mid-level between the much larger Lower-High, but it is significant enough to local traders that they will start a new count for a bull trend.
Daily Bitcoin Volume
As we talked about last week, the Volume average lost its upper support and was making its way down to the lower support. This is still in effect. We have not used the lower support as we have not reached those levels, but we can see the average is clearly sloping downward. This makes traders skeptical of the recent pump as there were not enough days in the month that were green enough to sway the average. Now, that is a 30-day average, and only two data points out of 30 are not going to make the average go crazy. Instead, look at the Volume bars and notice they are standing tall, however, they are lower than the recent weeks.
Bitcoin Dominance did not break through the resistance as previously thought. This time, history did not repeat itself. Instead, as mentioned earlier, the entire market pumped and by pumped, I just mean we didn’t see the 300th consecutive day of selling. Bitcoin Dominance took a sharp drop, exactly at the resistance level, and has already temporarily found some support in the previous support zone. Dominance dropped because there was a ton of capital flowing into the Alts while Bitcoin was establishing itself above $20K for four days.
Bitcoin CME Futures
After the latest massive fill from the CME Futures, we had a relatively quiet week. All gaps from daily opens and closes were filled easily within the next day of trading. The Sunday Open was very near to the Friday Close, and that gap has been filled as well. Options expire tomorrow, and we could very well see some serious volatility come November 1st. Be that as it may, we can now shift our attention to not only the lower gap but the next upper gap as well. If Bitcoin is to rally, that upper gap is the target. That upper gap needs a level of $28,920 in order to be filled. It would be far easier to send Bitcoin back to $16K and fill the lower gap than it would to push to nearly $30K, especially in a downtrend.
This is an extremely interesting area that we are approaching on the Daily, and this price action is trying to tell a story. Had we not had that loc on October 13th, we would be in a somewhat clear Dailyuptrend since September 21st, but we did have a new lower low, and that low immediately formed another lower high on the very next day. This action is volatile and hard to give full merit to but it is on the chart nonetheless.
The area we are currently backtesting is from the local lower-high before the drop on the 13th. This is a significant level as it represents where selling should occur if the Bears are truly in full control. The fact that the Bulls broke through it and are continuing to trade above it will make some traders scratch their heads.
The resistance that we feel is the overhead resistance zone that we have in place and have had in place for quite a long time. So, that area makes sense to sell and it is working accordingly but what happens if the Bulls gather more momentum? $22,800 is a more clear level to break and hold if we really want to invalidate the downtrend. This is the second sign that things have slipped away from the Bears and buyers are coming in to push a test on older levels. However, if this area is to hold, we have four zones that can all act as support. The easiest way to concur that if you’re a Bear, is to rip right through with late liquidations.
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