Chartpunk Bitcoin Alpha #74

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

Bitcoin has been in a macro uptrend since March 2020, with consistent higher highs and higher lows. Thus the high time frame market structure is bullish, with the support and invalidation point being around 30k. The 30k support zone is the confluence area of the July 2021 local low, and the volume weighted average price of the whole uptrend. Should the 30k zone fail, then there is some support at around 24k, but more likely the price will fall right onto the 20k level which is the previous ATH level and which has never been tested before from the upside as support. As for my opinion, I consider the 30k zone strong enough to hold for now, but time will tell. If the bulls want to show some power, they need to break the 41k zone and turn it into support.

The analysis of the four key daily MA levels (20/50/128/200) is showing a local downtrend since November 2021. Price action is under all of the MA levels in bearish territory. The 20MA and the 50MA are falling, and the 128MA has also started to descend. Descending MA levels serve usually as heavy resistances, as it is not enough to merely breach their levels, but a confident price action is required to make them ascending again. Anything under the 20MA level of 40k is bearish, and the breach of the 50MA at 44.2k would indicate some bullish power. All in all, a confident price action above 52k would enable us to consider the local downtrend as invalidated. RSI is trending down on the daily, attempting currently to breach the downtrend, we will see how far that goes. The Knoxville Divergence indicator is showing clear divergences in the 30–35k zone which could be a strong signal of bottoming in this region.

Multi Time Frame Momentum Analysis

The Directional Movement Index is bearish on the 3-day and 1-day time frames supported by a bearish Parabolic SAR setup. The 8-hour time frame is showing a bearish DMI, but a bullish PSAR. And the DMI on the 4-hour chart has flipped bullish, and is supported by a bullish PSAR. All in all what we can see here is that bullish momentum is showing on the low time frame which is a good sign. An ideal bullish continuation would be to see this bullish setup flow over onto the higher time frames.

Low Time Frame AVWAP Analysis

The key volume weighted average price levels of the November 2021 downtrend are 41.2k, 44.8k and 48k. These are the key resistances that the bulls should tackle in order to beat the downtrend. Currently we are seeing an overbought Stochastic RSI which is not an ideal setup to launch an attack on resistances. Ideal would be to see a nice consolidation just under the 40k level, see the StochRSI cool down to oversold, and launch an attempt to breach the resistance zone from that setup.

Multi Time Frame Predator Chart Analysis

The 4-hour and 8-hour Predator charts have become bullish, with a bullish indicator and a price action above the ascending 20MA lines. The 1-day and 3-day charts however are still bearish to me, notwithstanding the fact that the indicator is in a cautiously bullish setup. As long as the price action does not flip the 20MA levels into an ascending setup on the 1d/3d, I will not consider these time frames bullish.

Summary

The bullish momentum on the lower time frames is showing to us either the exhaustion of the sellers or the return of the buyers. The 30k zone is a very strong support, and divergences have starting to pop up. These could be the early signs of a bottoming process. We are still in a clear downtrend, but due to the bottoming signs, I have started to build a 15% exposure to Bitcoin. I think this might be a reasonable time to tip our toes into Bitcoin river again.

Like the newsletter? Do not miss any Daily Alpha, follow Chartpunk on Facebook, Twitter, Telegram or Reddit!

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.

Thanks for your clap :)

Did you know each Medium user can clap an article up to 50 times a day for free? If you want to show your support for my work, please consider clapping this article all 50 times! It helps a lot, and motivates me to write more!

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.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Chartpunk

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