Good Evening All? Tonight we discuss bitcoin, then as of tomorrow, we will have the Forex update and the Indices to consider.
So what are we going to consider tonight?
The first chart, “Liquidity Run” Is based on the daily. The issue i have is the sharp run-up from bitcoin…No test of the 200 on the daily as of yet…I would be more comfortable going long if bitcoin would test the 200 ema on the daily, However upon closer inspection, we need to understand what zones we need to consider to justify bitcoins move up towards the “Liquidity Run” zone.
What is this zone? Simply put, the previous vectors from June.
Now we need to dive into the chart to understand the reasoning: “Does Bitcoin have more room to move up?”, as always, I want to consider what Bitcoin can do to make me believe it will go up as opposed to simply hoping it “just go up”
Refer to the “Vector Trap” zones chart.
This is the anticipated journey of bitcoin as long as it maintains the 50 EMA on the 4hour chart.
Until the price breaches this zone, we assume a move higher is on the cards.
Notice the red arrows in the chart. The attempts up will include vector candle traps, to identify a vector trap you are looking for the price to move aggressively up with a swift recovery or at least a 50% retracement of the vector candle.
Consider the High Volume Node area…If price sustains this area, then we would assume that interest from buyers is present, we know the MM will always fulfill the obligation to the retail trader by making sure they get their orders filled, so if bitcoin can hold this region then we assume buyers are in this zone to get effectively trapped into higher price movement.
You have to remember, as much as we are looking for traps, we can still capitalize on the movement that happens, just don’t be caught up in “holding” for maximum profit knowing that you are part of the trap that will trigger a return back down to shake out the last minute 100x traders who want action.
Lets consider breaking the 50EMA on the 4-hour…Refer to the chart “50EMA Break scenario” – Now the above will be valid if price holds above the 50, we just need to consider the wicks above where the stopping volume candle (violet) is as a point of interest for us to assume price will get there and produce an attempted break out from that high and continue up…What if it comes down from that point? Well you would have the 50ema as the first point of support for the proof of the move. So be mindful of that zone if that is the scenario.
Back to this 50 ema break to the downside, It’s clear the green vector candle is present, and we have not had a response from bitcoin in relation to the DXY chart.
We have seen in the past when dxy does something like this and bitcoin doesn’t react, we are waiting for bitcoin to follow the narrative and come down.
So if bitcoin breaks the 50 ema on the 4hour expect the scenario of price recovering the green vector, of course, you wait for the retrace, you want the proof it can actually continue lower, The red arrows again will suggest the vector candle traps to shake out the short term short traders missing out on a move lower, the first test will solidify if the MM is planning on continuing lower, you want to focus on volume rising at this point of the retrace as rising volume after taking out a low is consistent in MM running for short liquidations.
The nearest resistance is the Value area high from the volume profile. If price cannot clear this zone, then the 50 ema on the 4hour is the next logical point of interest to attack.
Now some fundamentals:
Bitcoin Optix chart shows a reading of 0.52. Focus on the line i have drawn, it appears that people are starting to feel less optimistic. It’s trending lower…Could that suggest that people are taking some profits and paying close attention to the macros of the US?
Well, the crypto greed index will suggest something else.
The last time crypto was showing great greed is marked in the first red cross to the left of the chart. The index suggests that a reading above 50 is excessively optimistic (greedy) A reading below 30 is excessively pessimistic (fearful). Price is showing the same structure as it did the last time price and the index chart was at a reading above 50 (it came in at 60 when bitcoin was 47967).
We are now at 60 and before the last high, it was 61 before it pulled back.
So we are left with a scenario that Bitcoin fundamentals from the above would suggest a turn from bitcoin.
Remember, we are driven by complete macros. People are following the stock market and the reality will sink in about the fed increasing the interest rates more.
All you have to do is consider the smart money chart…We are in very interesting zones. This chart is showing retail (dumb money) is beyond exciting. The last time it hit that zone was back in Sept 20 when the market dropped aggressively. If you look further into the chart you will see after Sept 2020, the Retail line (red) was still high but trending lower, But this time round its a sharp aggressive move, just look at the difference between the moves in the chart (black line is the SP 500).
Overall guys, we are speculating what bitcoin will do over the next few days.
The macro charts above are an insight into helping you manage any existing long-term trades and get a feel for the change in the narrative to the downside. Macros regarding the fed will come to fruition. We just have to be ready and not be taken by surprise.
I hope this breakdown puts things into perspective.
Let’s see how it plays out.
MAD LOVE
T
