Chartpunk

Nov 28, 2021

6 min read

Chartpunk Bitcoin Alpha #60

Join me on the journey to a 250k+ Bitcoin price! We will definitely have some good and bad times on this bumpy road, but with good alpha we will be able to ride strong trends and avoid sharp losses. Being a trend trader, I am not promising to pinpoint exact highs and lows, but I hope my view will assist you in making your own decisions.

HTF Market Structure

Bitcoin HTF Market Structure 2021.11.28.

The high time frame 1-day Bitcoin chart is still bullish. The uptrend of July 20 has remained intact so far, and the price is currently testing the lower trendline support of the ascending channel. As long as the channel remains intact, bulls have nothing to fear. Technically speaking a local low above 41000 would mean just an other higher low in the ascending sequence, and would not fully invalidate the bull run.

There is currently a new wave of FUD brewing on the market news due to the Omicron COVID strain, we do not know yet its possible immediate implications to Bitcoin. The institutional investors and hedge funds that Bitcoin investors have been so eagerly waiting for during the previous market cycles are already here, and due to their parallel exposure the correlation is getting stronger between the Bitcoin and the traditional financial markets. Accordingly, a panic sell on the traditional markets on Monday could result in a panic sell on the Bitcoin market as well. Leverage is rather high, which could result in extreme price swings in any direction.

From a technical point of view, Bitcoin has so far successfully defended the bottom trendline of the July 20 ascending channel. The last time this trendline has been tested was in September, and it took more than a week to form a proper bounce, resulting in a new all time high. Trendline support is currently at 54300, and the anchored volume weighted average price (AVWAP) support of the July 20 uptrend is currently at 50500. These are the immediate support levels to watch in the following day.

The immediate resistances for a possible upwards move is the zone formed by the AVWAP levels of September 29 at 58600 and of November 10 at 59600. This AVWAP resistance zone is congesting, and there is a reasonable chance of these lines making a bearish crossover in the coming days.

The stochastic RSI is oversold both on the 1-day and on the 3-day charts, which is usually a sign of bullish momentum. As stated several times in my recent market reports, the oversold 3-day stochastic RSI has provided great entry point for dollar cost averaging investors during the previous year.

LTF Market Structure

Bitcoin LTF Market Structure 2021.11.28.

The low time frame Bitcoin chart is controlled by the bears. A descending channel has formed on the chart, with multiple touches of its top and bottom trendlines and its middle level also seemingly acting as price support/resistance.

The price of Bitcoin is currently fighting with the lower trendline of the channel, and the oversold stochastic RSI momentum on the 4-hour chart might result in a relief rally. Such a move would reinforce the bottom trendline as support, currently with a level of 53800.

The AVWAP levels of the November 10 and November 15 touches of the upper trendline of the descending channel are currently at 59000 and 57700, which is a clear resistance zone in the short term.

Summary

Based on the above HTF and LTF market structure analysis, I am considering the level of 58000–60000 as a strong resistance of bullish price action continuation. Bulls would need very confident price action above 60000 to restore full bullish momentum, but this will get harder with each week of lower level price action, as the downward moving price is providing lower and lower entries for swing investors, who will line up with even heavier sell pressure around the resistance zone. Support zone of the bulls is currently in the 50500–54300 level. If the support level fails to hold, then the uptrend of July 20 will be in danger, and a possible swing low under 41000 would put an end into the higher highs and higher lows sequence that has been intact since late July.

Let’s zoom out for a sec!

Bitcoin Ascending Logarithmic Channel of 2015

The ascending logarithmic channel of Bitcoin is showing us that the uptrend since late 2015 is intact, and the price is currently attempting to tackle the middle level resistance , currently being around 70000. I am still on the opinion that in case the bullish momentum seen on the HTF charts is able to push the price action of Bitcoin above the middle level, and with a retest could establish this line as support, then we could see 6-figure levels in the coming months. All eyes are now on keeping the July 20 uptrend intact.

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What is trend trading?

Trend trading is a market strategy that is reasonably different from swing trading or day-trading. A market “trend” is a tendency of a financial market price to move in a particular direction over time. Swing traders and day-traders are usually trying to pinpoint low-term market tops and bottoms, and take aggressive positions expecting to profit from a swift change of market direction. Trend traders are looking for consolidated and strong directions on a given market, and are trying to ride the trend for as long as possible. These traders normally enter in the market after the trend “properly” establishes itself. My core strategy in trend trading is to look for a market setup where the long time frame market structure is indicating a solid trend, and intact price action is supported properly by the low time frame charts.

What are my key indicators?

I am using trendlines, channels and moving averages to identify market structure and to spot trends. In crypto trading my core moving average indicators are the 50 and 128 daily moving averages. I am also using anchored volume weighted average price (AVWAP) analysis to identify support/resistance levels.

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Join the discussion!

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Disclaimer

The present article is a free material, for entertainment and educational purposes. Nothing in this post shall be considered as financial advice, you shall never make any financial decisions or financial investments based on a singly source of information and without doing your own research.