Chartpunk Bitcoin Alpha #64
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 has held the downwards trendline of April again with its latest 3-day candle close. But the longer the retest the weaker the support. With regard to this, bulls should lift the price from the trendline as soon as possible, otherwise the price action will break down, and probably flip that trendline into bearish support.
The current price action is stuck between the 46400 April downtrend level and the 50300 July uptrend AVWAP level. The breakout in any direction will decide the direction of contination.
A breakout to the north could elevate the price until 55000 which is an AVWAP confluence zone where levels of the September uptrend and the November downtrend are meeting. A break of this level could signal the possible end of the current bearish environment. Bulls want to avoid these AVWAP lines to make a bearish crossover.
Stochastic RSI is still in oversold territory, providing the bulls with some hope of a bullish revival.
The moving average analysis of Bitcoin does not paint a bullish picture. The price is trending down under the 20DMA, and on its way to losing the 200DMA very soon. Both the 20DMA and the 50DMA are descending, and the 128DMA and the 200DMA are flat. There is absolutely no bullish sign on this chart, and the losing of the 200DMA is traditionally a highly bearish sign in technical analysis.
On the 3-day RSI the bulls have just lost a long term upwards trendline which has started back in June. Currently we are seeing a downtrend since November on the RSI which was able to push the indicator under the long term uptrend. Yet another bearish sign. The Awesome Oscillator is also in negative territory on the 3-day chart, and the Predator indicator is bearish.
LTF Market Structure
The low time frame Bitcoin chart is bearish. Price action is under all of the significant AVWAP levels of the bear market that has started in November. The 45500–46000 zone seems to serve as bottom for now, but with the consistent lower lows and lower highs and the downward pressure I do not exclude going even lower. Stochastic RSI is oversold on the 4-hour chart, but as we see these oversold momentums have not been able to beat lately the lower AVWAP resistance zone currently being at 48100–49200. Should the bulls somehow push through this zone, then price could elevate up until the 52900–53900 resistance zone.
Predator Chart Analysis
The HTF 3-day Predator chart is bearish. Indicator is red, and the price action is under the 57000 value of the descending 20-period moving average.
The 1-day Bitcoin Predator chart is bearish, with consistent price action under the descending 20-period moving average, and a bearish Predator indicator. Confident price action above 51000 should be a start for the bulls to build out some hope.
The LTF Predator chart is showing the lower lows and lower highs, and price action happening under the descending 20-period moving average. This time frame is also bearish.
As we can see, all three main timeframes of the Predator analysis are currently bearish for Bitcoin.
As long as we do not see confident price action above 55000, we can not talk about an intact high timeframe uptrend. Hence, trend trading investors should sit on the sidelines for now, and they will most likely have the opportunity to focus on the holidays instead of the Bitcoin charts. Long term DCA investors could use this environment to buy the dip, as since November we have seen a rather significant pullback, and the Stochastic RSI is oversold on the 3-day chart.
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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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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.