Bitcoin - a flight to the moon is canceled!
Updated
I am updating my BTC analysis on 1D. My review has the following add ons:
What are the basis for going SHORT on the chart?
1. An acsending wedge has been formed. It's in green colour. It is feasible for the price to touch the top line of the wedge around 64500-64700 USD, and then move down into the purple triangle. This is one of the scenarios for price action.
2. The second scenario involves the price moving inside a formed descending purple triangle. Thereafter, a price can be expected to break the bottom support line of this triangle:
How are indicators supporting this?
1. RSI support level has been smashed on 22 October. MACD wave is moving towards zero level. RSI and MACD divergence in relation to the orice action is very clear on 4H. The divergence has started on 7 October and is actively present up to this day.
2. Market volatility is falling. On 28 October RVI dropped below 50 - it's the first signal to sell. The second one will be at level 40.
3. Vertical volume is falling still while the price is moving up. Even though the price action slowed down, it is still at the top and showing divergence. A good strong signal to go SHORT would be a high volume bar indicating a sale - that would be the bar in red colour. It's best to look out for it on 4H, otherwise you may miss a good slice of profit if you concentrate on 1D only.
What are the fundamental basis?
On Wednesday, FED stated that they will reduce bond purchasing by 10-15 billion a month. Less credit volume means lower liquidity. When liquidity is reduced, the price goes down. However, how is this relevant to bitcoin? Well, according to research company Datatrek, in 2021 the correlation between bitcoin and S&P500 is 79% on 1-10 D timeframe. Bond market has a direct effect on equity market. When the equity market falls, speculators reduce their positions starting with higher risk assets, one of which is bitcoin.
Why is the light to the moon of 100,000 USD is unlikely to happen now?
This is because a couple of trillion dollars would have to be pumped into bitcoin to move its price to the top. There is simply not enough liquidity to make this happen at 60000-67000 USD level.
What are the basis for going SHORT on the chart?
1. An acsending wedge has been formed. It's in green colour. It is feasible for the price to touch the top line of the wedge around 64500-64700 USD, and then move down into the purple triangle. This is one of the scenarios for price action.
2. The second scenario involves the price moving inside a formed descending purple triangle. Thereafter, a price can be expected to break the bottom support line of this triangle:
- and go down to 38.2%, followed by correction and further fall 50% on Fib (A-B-C pattern);
- or fall directly to 50-55% on Fib to liquidity support level.
How are indicators supporting this?
1. RSI support level has been smashed on 22 October. MACD wave is moving towards zero level. RSI and MACD divergence in relation to the orice action is very clear on 4H. The divergence has started on 7 October and is actively present up to this day.
2. Market volatility is falling. On 28 October RVI dropped below 50 - it's the first signal to sell. The second one will be at level 40.
3. Vertical volume is falling still while the price is moving up. Even though the price action slowed down, it is still at the top and showing divergence. A good strong signal to go SHORT would be a high volume bar indicating a sale - that would be the bar in red colour. It's best to look out for it on 4H, otherwise you may miss a good slice of profit if you concentrate on 1D only.
What are the fundamental basis?
On Wednesday, FED stated that they will reduce bond purchasing by 10-15 billion a month. Less credit volume means lower liquidity. When liquidity is reduced, the price goes down. However, how is this relevant to bitcoin? Well, according to research company Datatrek, in 2021 the correlation between bitcoin and S&P500 is 79% on 1-10 D timeframe. Bond market has a direct effect on equity market. When the equity market falls, speculators reduce their positions starting with higher risk assets, one of which is bitcoin.
Why is the light to the moon of 100,000 USD is unlikely to happen now?
This is because a couple of trillion dollars would have to be pumped into bitcoin to move its price to the top. There is simply not enough liquidity to make this happen at 60000-67000 USD level.
Trade closed: target reached
Liquidity level has been reached as demonstrated on the chart.
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