XForceGlobal

Bitcoin: Understanding the CME Futures Gap 1D (Aug.03)

CME:BTC1!   Bitcoin CME Futures
X Force Global Analysis:


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In this analysis, we explore the Bitcoin CME Futures chart on the daily in order to understand the technical barriers that Bitcoin faces in its bullish rally.

Analysis

- A gap is an area discontinuity in a security's chart where its price either rises or falls from the previous day’s close with no trading occurring in between
- Gaps are common when news causes market fundamentals to change during hours when markets are typically closed, or when there are sudden movements within the market
- Regardless of the type of gaps, all gaps have a tendency of being filled.
- Tendencies indicate that while most gaps do get filled, understanding gaps from a probabilities perspective, sometimes gaps can be left unfilled
- The current chart for Bitcoin's CME Futures on the daily demonstrates that a major gap around 11.7k has been filled
- This gap had been in existence for almost a year, and was recently filled during Bitcoin's parabolic rally
- However, because Bitcoin's uptrend was so steep and sudden, the trend is extremely choppy, and has left a lot of gaps on its way
- There are major gaps around the following levels: 11.2k, 11k, and 9.8k

What We Believe

Given that these are all reasonable levels of correction targets, it's highly likely that we see a corrective move possibly filling the lower gaps below, before seeing another bullish rally to push forward beyond 14k levels.

Let us know what you think in the comment section below


Trade Safe.
Comment: After a clearer bullish candle filling the 11.8k CME gap with the candle body, we reanalyze the daily CME Bitcoin Futures chart.


Based on the Fibonacci retracement, we are currently facing strong resistance at the 0.786 Fibonacci resistance.

We have filled the two upper gaps, as three gaps below the current price level still remain unfilled.

Not to mention that the probability of all three gaps not being filled is highly unlikely, even if we take into account the probability of gaps potentially being filled by candle wicks, the huge gap at 9.7k is difficult to ignore, due to the size of the gap.

A correction is a matter of when, not if. The further we go up or the longer we stall at current price levels, the more brutal the correction will be. A corrective trend filling all the gaps at 9k levels is still considered healthy and relatively bullish over the long term, as a form of a pullback.
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Comments

Bitcoin is volatile. CME only trades part of the day. Of course there is going to be a ton of gaps. And of course it will fill most gaps because it's volatile, until it doesn't. GENIOUS!!!!!!!!!! It also could run to 20k and then fill the gaps right? So how do you play that?
Reply
@btcbum, You're absolutely right. Trading based solely on gaps is rather dangerous. For instance, the upper gap at 11.7k took almost a full year to fill. You can reference our other posts regarding in-depth technical analysis on why a corrective trend is highly probable. Thank you for commenting!
Reply
The gaps will fill as soon as the FOMO crowd joins the party.
Reply
@shawnman, Very well put. There has not been an inflow of new capital into the market.

For more on this matter, you can check out our latest analysis:

Reply
There are more compelling reasons for the price to test again those area, I cannot believe someone thinks that a gap alone is the reason for the price testing the zone again. I would compare the gap MIT with the news driven trading, so many still trade based on news, this is really a receipt for disaster for your account.
Reply
@pgarret, Thank you for commenting! You can reference some of our other posts on why a corrective trend may be a probable scenario.
Reply
Really helpful, it's crazy to think of they mostly always get filled
Reply
XForceGlobal Singlestevie
@Singlestevie, Thank you for the comment :)
Reply
Gaps in BTC's charts are a glaring difference in what is actually trading. They are remnants of a paper price only, not the true underlying. They are a lazy bankers gap, left by taking the weekend off. BTC never sleeps, so there are no gaps in BTC's chart. If everyone would understand and abide by this reality, BTC would be free again! Paper sucks, it's only purpose is for manipulation.
Reply
XForceGlobal toddler22
@toddler22, Thank you for sharing your insight!
Reply
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