Good evening all.
The question on everyone’s mind is…Will bitcoin continue up? When you start asking yourself that question, you have to assume that if you continue to ride the flavor to the upside, how long will you be in trades in for till you take a profit?
In tonight’s break down I am going to share with you a few concepts to put things into perspective. Some of you may enjoy this, and some of you may start to think “ok, that makes sense” or Shut up Tino bitcoin to 100K.
Assets Discussed: BTC –
Tomorrow’s Assets will be EURO/ USDJPY/SP500/NASDAQ/US30
Let’s start with the first image and break it down for you to understand.
The stock market and the economy are closely related. When the economy is doing well, the stock market usually goes up, and when the economy is doing poorly, the stock market usually goes down. Sometimes, the stock market can go down a lot (more than 30%) when the economy is not doing well. This is normal and happens from time to time. To understand how the economy is doing, we refer to the Macro index model that looks at 11 different economic indicators.
For reference I have included these indicators below that most of you are aware of:
New Home Sales Housing Starts Building Permits Initial Claims Continued Claims Heavy Truck Sales 10 year – 3 month Treasury yield curve S&P 500 vs. its 10 month moving average ISM manufacturing PMI Margin debt Year-over-year headline inflation
When this index is above 0.7, it means that the economy is doing well, and when it is below 0.7, it means that the economy is not doing well. So, if you are an investor, you should be more cautious when the index is below 0.7.
So what is the current reading? The chart above suggests that based on the Indicators above we are in the 0.273 zone. The red shaded area implies that you are to only be short.
Now here is where we get caught up with things. You see bitcoin and the markets have made a move across the board. Naturally, you feel like you should run longs because everyone else is. Could this move be the last move before everything falters and follows what this index model is suggesting?
Let’s break down Bitcoin from a perspective of macros and price action:
The term I am going to use is what you call a “Blow Off” – Evidence of this is suggested by the public interest that is going into bitcoin right now. In other words, everyone is super excited about bitcoin moving and pilling in. Now, this is not different from when bitcoin made the high of 19733 back in 2017. If you notice the green vector candle in the chart you can see that price traveled some more and then reversed.
The only reason I am referring to Bitcoin in 2017 is we have the same behavior now with this move up.
The Bitcoin Optix chat shows that Bitcoin optimism is at 90.11.
- Excessive Optimism: 80.0
- Excessive Pessimism: 20.0
So based on the general public. We would assume that everyone is super optimistic about bitcoin and the readings are way above the higher band of the readings. if Excessive Optimism is 80.0 and bitcoin reading now is 90.11 then that would suggest people are selling their homes and living in their cars to buy bitcoin.
The next chart is adding the smart money concept to the bitcoin chart.
We can see the Smart money index is showing a reading of 0.22.. Now each time this reading of the SM index comes towards these zones, we start to see things roll over. Because we know the concept is based on when price is rising, people are being sold into and likewise, price dropping is when buys are happening by the smart money.
Looking at the chart, smart money index is turning upwards. So based on Friday’s close, can we assume that the move in bitcoin will start coming back down?
Let’s break down the chart:
Firstly let’s refer to our drawings from last week. it appears bitcoin has followed everything so far in the chart.
From a macro perspective, we can assume that everyone is pumped about what has happened by bitcoin…You see when the price goes to a specific point in the chart, everyone is compelled to the idea that it will continue further in that direction. I guess that is why people fail to pay themselves because they are fixated on the belief that the price can continue. I guess this is the best trick in the MM playbook. Do you ever wonder why those liquidation points get taken and it’s always the liquidation zones that are bright yellow in Hyblock that are taken? Why does retail fail to pay itself?
Now we are operating in the Extreme zone of our image on bitcoin from last week.
The next image is my view of its next journey.
So assuming you have reviewed the images of bitcoin on the 8hr and 1hr.
One thing to take into consideration is last weeks psy ranges.
Hands down if we see a very tight psy range forming going into mondays close, we can only assume they will try and move price higher.
The reason for this is the Psy ranges are based on the spread that the MM moves price to align itself with the flow of orders between the range it sets in terms of the psy high and low.
In forex its easier to determine if price is going to move away from the psy ranges because we can use the adr for each pair and go on that basis.
Bitcoin is different. Sometimes it follows it, other times it does its own thing.
So where does it leave us?
I am expecting a retrace, now the calendar is showing that Chinese have New Year Celebrations, (Happy New Year to my guys from China) So the Hongkong session will be closed.
Now taking the macros of the above, it’s hard not to assume that the current move in bitcoin is a short squeeze and an invite to get the longs to step in.
Now the calendar above shows you the high-impact news plays that are out next week. So its not going to be that much of a bad week in terms of high impact news but due diligence is still required.
I hope the above can be digested. I have tried to condense it as much as I can and getting straight to the point about things.
Let me know what you think.
I have also attached Hyblock readings
Mad love
T
