Weekly Recap – 11-20-22
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. Everything is REKT. That essentially sums up the over 20,000 Crypto tokens across the entire landscape. The trouble is, we likely have more to go before things start turning around. We are still in the aftershocks of the ultimate scam, otherwise referred to as FTX and SBF.
Bitcoin Monthly - Long-Term
As we can see from the multi-year Monthly view, we have broken the overall support at the 2017 ATH, or $20K. This is the catalyst for further downside. The reminiscence of the $5-6K area that broke in late 2018 after the 2017 ATH, is ringing almost a little too loud. Mind you, this has nothing but, then again, everything to do with FTX. We have entertained some analyses that can lead us to $10K Bitcoin, and it appears we may actually get to see that in short order.
Bitcoin Weekly - Mid-Term
After the massive breakdown of the $20K area, we have been left with what is called a Doji. Last week’s candle ended up as a $48 loss. This is compared to the $4600 loss the week prior. That’s a 100X difference, in case you were keeping track. A Doji is a candle with a very small body and very small wicks above and below the body. For a Weekly chart, we can consider a $48 body from Open to Close as a small body.
These candles represent indecision in the market and often are considered resting candles after large moves. Often, we see a period of rest followed by continuation. If we are to see a continuation, the only direction to continue from is down. There is some interest in the $14K Summer 2019 Swing-Fail area, but there is more support in the $10-11K zone.
Bitcoin Daily - Short-Term
For those of us who love our patterns – this Bear Pennant is clear as day and it just broke right now. A propper Bear Pennant needs to have a near vertical flagpole, which we can see from the 27% drop over the course of four days. Then we look for a period of consolidation after the initial drop. This consolidation is generally made up of Lower Highs and High Lows. When the low side breaks its support at or near the apex of the resulting triangle, we copy the measured move from the initial drop and add it to the breaking point. This results in a different percentage but the same actual dollar amount. Consider a potential loss from these levels of another $6K, and we would be sitting pretty on $10K.
Daily Bitcoin Volume
Volume had a much quieter week than the last two and that is actually a good thing to see. We are witnessing the settlement period after the shock and aww. This is when the dust has settled and it’s time to make sense of the events that led us to where we are. Humans tend to overreact, especially in the markets, and when we see a period of high volatility, it generally takes a few days to a few weeks to let it all settle down before making any decisions.
Dominance is doing absolutely everything it can to remain above the Glory 40. Another successful bounce, albeit a bit sloppy. Dominance has continued upward with enough momentum to actually break it’s the very local downward-sloping trendline. This is significant because that extra momentum could be what Dominance needs in order to finally break the 42% barrier.
Bitcoin CME Futures
CME Futures has been all over the place after finally filling a 2-year-old gap in the high $16Ks. Day-to-day gaps and fills were spotty at best last week and we are left with two local overheads while the rest have been filled either the next day or within a few days of trading. As you can see from the chart, the next gap to the downside sits at $11,110. Nobody wants to hear it but there is a chance we fill that gap.
With the break of the low side support for the current Bear Pennant, analysts, traders, and investors alike, who trade patterns, will be selling off their Bitcoin in the hopes of buying it much, much lower. Although these target levels were always a possibility, adding new, current, and relevant data as confluence helps to really paint the picture. With the FTX scam, Russia and China politics at foot, the mid-term election bringing unexpected results, and Trump announcing he is running for President in 2024, we got a lot going on.
If we see $10K, then we follow the playbook of 2018. Massive drop, small bounce, consolidate, and then breakout. That breakout would be the potential beginning of the next cycle.
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