Chartpunk Bitcoin Alpha #71
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.
High Time Frame Market Structure
The high time frame market structure is bullish, as Bitcoin is printing consistent higher highs and higher lows. As long as the current downtrend does not print a low under $28800, technically the macro level market structure will remain bullish. Accordingly, in the next potential upswing, Bitcoin should ideally top above $69000 to preserve the bullish market structure.
The Bull Market Support Band is currently between $49800 and $52500. As the price action is beneath the BMSB level, we are currently in a mid level time frame bearish trend. Price action above $52500 would flip the BMSB analysis into bullish result.
The 1-year linear channel analysis of Bitcoin is showing a slightly ascending channel, in which Bitcoin is currently trading near the lowest Fibonacci support. Long term investors who follow channel trading rules usually consider this region as an accumulation zone, with invalidation at the bottom channel trendline.
The volume weighted average price level of the uptrend since the 2020 March crash is currently providing support at $29300, I consider this level as macro bullis trend support. The AVWAP of the 2021 November downwards impulse is $51300, an intact bull market would require price action to happen above this level.
The analysis of the 20/50/128/200 day moving averages is bearish. Both the 20MA and the 50MA are in steep decline, and the 128MA has also started to descend. Price action is under all of the moving averages which is bearish. In confluence with the other HTF charts, we can state here that a confident price action above $53000 would be required to flip this chart into a bullish mode. The Awesome Oscillator is bearish, and the RSI is trending down.
In summary, the high time frame market structure is telling us that the macro level Bitcoin bull market will remain intact until the breach of the $28000–$30000 support zone, but in the short term the bulls need to push the price action back above $53000 in order to regain the bullish momentum.
Multi Time Frame Momentum Analysis
The multi time frame momentum analysis is bearish. The Directional Movement Index is consistently bearish on all of the 4h/8h/1d/3d time frames. Some good news here however is that the Parabolic SAR has been flipped bullish on all time frames lately, which could be a sign of a potential bottoming in the current price region.
Low Time Frame AVWAP Analysis
The low time frame AVWAP chart is showing how Bitcoin is hovering right under the $44600 resistance level of the latest downwards impulse. The Stochastic RSI has been able to cool a bit since the last rejection which looks nice. Bitcoin seems to be gathering strength here before a next attack on the resistance. To flip this chart into bullish mode, price action should tackle all of the $44600, $47600 and $50100 resistances, and build support above this level.
Multi Time Frame Predator Chart Analysis
Multi time frame Predator analysis is bearish on the long term, but is showing some strength on the lower time frames. The 8-hour time frame has become bullish, as the 20-period moving average has been turned into support and has started to ascend. Indicator is bullish on the 8-hour. The 1-day and 3-day time frames are still bearish, with price action under the descending 20-period on both charts. Predator is showing bullish candles on the 1-day chart, which is nice to see, but not enough.
From a trend trading perspective I still do not see any reason for opening long positions in Bitcoin for now. Price action is clearly bearish, and anything under $52000 is bearish to me from a trend trading perspective. The fact that the price action is in the bottom zone of the 1-year Linear Regression Channel could be a reason for long term investors to DCA into Bitcoin positions. I am seeing positive signs which may signal bear exhaustion, but the bulls are not showing convincing power yet. I am closely watching the 3-day RSI, as it has a clear chance to reach oversold territory, and that has been macro bottoming signal in the history of Bitcoin.
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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.