Chartpunk Bitcoin Alpha #73

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

I know it is hard to digest in such stormy market momentum, but Bitcoin is technically still in a macro time frame bull market. Ever since the 2020 March crash, the price action has been printing higher highs and higher lows — which is the technical definition of an uptrend. The macro bull market would be invalidated in case Bitcoin would drop under the zone of $28800–29300 which is a confluence level of the previous low and the volume weighted average price of the complete bull market. As long as price action is staying above this level, Bitcoin will technically remain in a bullish market structure on the macro time frame.

The analysis of the key 20/50/128/200 daily moving averages is showing to us that Bitcoin is in a local downtrend. The price action is under all of the key moving averages. The 20MA and 50MA are falling, and the 128MA has also started to descend. RSI has reached oversold zone on both the 1-day and 3-day time frames. The Knoxville Divergence indicator which is a reversal signal has appeared on the 1-day chart. The last time this indicator has popped up on my chart was in November, at the top of $69000. We will see if the Knoxville Divergence gets confirmed in the following days. Based on this chart, price action under $42000 is bearish, and $52500 is the level that the bulls would need to flip in order to get back the control over the market momentum.

Multi Time Frame Momentum Analysis

The Directional Movement Index is bearish on all of the 4h/8h/1d/3d time frames, and the bearish momentum is confirmed by the Parabolic SAR as well on all time frames. There is currently no sign of bullish momentum, on any of the time frames that I am following.

Low Time Frame AVWAP Analysis

The AVWAP-based impulse analysis of the November downtrend is indicating the levels of $43000, $46300 and $49600 as key resistances that the bulls would need to take over, in order to beat this local bearish trend. The Stochastic RSI has reached oversold territory, we will see if that might result in a relief rally testing the resistances in the coming days.

Multi Time Frame Predator Chart Analysis

Predator indicator is clearly bearish on all of my time frames, and price action is clearly under the 20MA on all of the time frames. Trend and momentum is absolutely and clearly bearish here, confident price action above $47000 could flip these time frames into a more bullish setup.

Summary

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 $42000 is bearish to me from a trend trading perspective. I am seeing positive signs which may signal bear exhaustion, but the bulls are not showing convincing power yet. The appearance of the Knoxville Divergence on the 1-day chart, and the fact of 1-day and 3-day RSI becoming oversold might signal the start of bottoming, but this needs confirmation.

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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!

My goal with this article to share a unique perspective on certain topics. I’d love to hear your thoughts or questions, so feel free to comment them below. Have a great day everyone!

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.

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Chartpunk

Trading and hodling bitcoin since 2015 I Focusing on longterm trends I No alpha for daytrades