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. Bitcoin and Ethereum both are coming off the heels of decent weeks. After so much bloodshed, a single weekly green candle can be very refreshing for a lot of people, and it can help drive the market in unexpected ways. Crypto lives on sentiment and when the overall sentiment is good, prices generally go up. DOGE is also up 5% over the last 7 days but remains down 17% from this time last month.
Bitcoin Monthly - Long-Term
Unfortunately, one week does not make up for the beginning of November and the following weeks of little action. November closed red and where it closed was about $1000 lower than where it needed to be. This sets up a back-test of the former support and the likely result would be rejection. That area is in the low $18Ks.
Bitcoin Weekly - Mid-Term
Bitcoin Weekly is painting a very interesting picture. On a lower timeframe, you would see an elongated or exaggerated Dead Cat Bounce or, at least, the potential for a DCB. More interesting is the slow climb back to previous support. What makes this support so important is that it held Bitcoin and the Bears in check for five months. Once we lost that area, which on this chart is around $18,750, then we lost our major support. This puts us in an odd spot, as many traders will get bullish at the first sign of a candle that isn’t red. Bear Market can do that to traders. The potential for rising up to those structures and finding resistance is far greater than running up to those levels and reclaiming support. As of now, we expect the rise to continue as we march toward the retest.
Bitcoin Daily - Short-Term
The Bear Pennant most certainly is invalidated by now. The potential fake-out to more downside turned into a short squeeze, and those who didn’t cover got liquidated. The Daily is now painting a twice-respected channel leading back to previous support. As mentioned above, that are is presumed to act as resistance. Of course, the reaction and the volume will tell the whole story. Leading up to that area, if momentum really picks up, then a case could be made for the Bulls to break through and flip back to support. This is unlikely, but we must always leave that door open. For now, the next test is $17,600 and then $19K.
Daily Bitcoin Volume
Pek Volume was slightly lower last week, making it the fourth week in a row of less peak activity on-chain. Outside of the FTX scandal, the action has been relatively week up until last week. This means that if the market was really trying to turn around, we would likely see higher volume last week instead of the continued decline. Not a great sign for things to come in regard to Bitcoin trading volume.
Believe it or not, Bitcoin remains at the continually contested 40% level. We do have a verified short-term downtrend approaching support once again. Not that I enjoy being the bearer of bad news but using support this many times in a weak market should mean that support will eventually break. Be that a flash crash or a continued downtrend, that much is left up in the air. However, all hop is not exactly lost. For Dominance to drop so sharply would mean that Alts are likely pumping. There have been occasions where the entire market decouples from Bitcoin, and in those scenarios, trading Alts can be very beneficial until stability returns to Bitcoin.
Bitcoin CME Futures
CME Futures continues getting the job done on nearly every fresh Daily candle. It took multiple attempts to clear the recent gap but not only did it clear it, but it also cleared it twice, just for good measure. Our Sunday/Monday Open did leave a weekend gap in its place, and it remains there as Bitcoin opened and pushed up without any downside so far. If a retest of the underside of Support takes place, expect the closest upside gap to get filled before a major downward event.
Now that the Bear Pennant has failed, we look to recent price action. We have a few potential ideas for current and future price action. Now that we have a validated channel, we look to respect that channel and then measure any outliers, either up or down. If the lower trendline is to narrow its angle, that means that the Bulls are trending further and faster than initially expected. The opposite is true if we see price action slip below the lower trendline.
Channels can help not only look at potential price action but the timing of that price action as well. If everything is to stay within the channel, then we can easily try to plot a time in which we may see some convergence. At the moment, we painted 4 potential outcomes. Unfortunately, three of them are rejection to further downside but, to be fair, we are still very much in a Bear Market.
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