Price action is on the verge of a significant move. If you want to push me for a time, then it’s by January 18th 4am CET!
Fear and greed is / has been sitting on ‘extreme fear’ for much of the year so far. Much like mid-July. There remains a number of weak-hands that need to give up their bitcoin at any price, let them. If I gave them one of my bitcoins right now they’d sell it before sundown. That’s how irrational the market is.
You can eliminate that fear by studying the probabilities. Is it possible price action falls through the floor? For sure. Is it probable? No. For a number of reasons:
On the above 3-day chart:
1) Price action has broken price action resistance.
2) Price action is now testing significant support (orange lines). Look left. It is highly probable price action bounces from here on past resistance.
3) Bullish divergence 1: Money Flow Index (MFI) is printing higher lows versus the lower lows in price action. This tells me money is flowing back into the asset.
4) Bullish divergence 2: MACD is printing higher lows. Although a lagging indicator by Crypto standards, it is powerful on the macro scale when you see it.
5) Today is a full moon ;-). Okay not serious, but for one reason or another price action rallies the majority of the time with a full moon. Look left. I don’t know why, just an observation. Good science is good observation.
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Someone below mentioned the divergence on the 12-hour. Thought it might be interesting to share:
"Indeed there is. With a 'incredible buy' signal. That signal did not even appear on the March 2020 sell off, which says a lot about the current sell off. The last time this signal printed was way back September 2019. Price action made a quick 30% move to the upside in the weeks that followed, which would be 54K today."
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It is fascinating to watch who is buying and who is selling right now on the orange lines on the top chart. Are the institutions dumping? Is retail catching a falling knife?
I've been studying the exchange reserves for the last couple of weeks, outflow continues to increase as inflow decreases. The selling pressure is only coming from one place, retail exchange reserves. The folks that never move their coins off the exchange.
It is frustrating to watch, have seen the purchase of hundreds of millions worth of BTC today on Binance alone, all fed from small hands. The on chain data suggest those same sellers purchased around the $55-60k mark. This is exactly why over 90% of investors lose money in this game. Emotions folks, a money killer. The buy walls you see below are those in control of their emotions.
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So much for Jan 4am. Despite the lack luster price action I'm incredibly bullish for the weeks ahead. Timing is impossible, so I'll defer to my 'what is probable?' for the desire to pin down date and time. The 12 hour chart below illustrates how price action performed in the following weeks after a buy signal. A 70% move to the upside followed the previous two signals. Currently a 'incredible buy' is printing withing a falling wedge, just as before.
If history repeats price action shall return to the All Time High by mid-March.
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In late September when price action was approaching the orange lines (top chart) the entire market was fearful.
On the lower time frames, this is a 6 hour chart below (prints nice and clearly than daily), short contracts are sky rocketing. The crowd are short.
Not only are the crowd short, they are doing so on leverage. Sigh. At the end of September there was a mass liquidation event, it even made the news.
Look closely, the number of short contracts are now almost equal to that of late September with 7 oscillators printing bearish divergence. The signs are there.
The probability of a short squeeze is increasing by the day and a lot of shorts are going to get rekt, just as before.
Folks, stay away from leverage.
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A great big pile of ‘nothing to see here’ as the market remains 100% emotional. The ‘incredible buy’ signal remains on the 12hr chart below. We can also see the ‘W’ shaped formation, look left, as price action at 41.5k continues to offer strong support. Yes, we might see a capitulation, that would be fantastic to flush out the remaining weak hands of the market. If not, one way or another price action must break out by January 23rd. If up, the inverse head and shoulders pattern suggests a quick move to 46k. If a breakdown, then 39.5k is strong weekly support. Below 39K? With a daily candle body? That’s a break of market structure, will cross that bridge when we come to it.
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PS: short contracts grew yet another 10% in the past 24 hours! This will be painful.
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Shorts are getting squeezed. Don't break out the bunting until 44k is in the rear view mirror. Only once a higher high is printed can the trend in price action be said to have reversed.
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Do you see the inverse head and shoulders breaking the neckline? near term target shown below, which will cause the formation of a much larger head and shoulders pattern causing panic. But not you, why? Because you understand head and shoulders patterns:
1) Don't confirm until the neckline is broken.
2) Such patterns form at the top of a rally. And we've not had one. How do I know? Because price action is at the same place as it was in January 2021. Let that sink in for a moment to understand why I'm super bullish.
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Capitulation - the market needs this flush out. If you’re on the fence about selling, then just sell already and feel better.
For the rest of us…
price action is trading inside this falling wedge since early October, reaching its apex by the end of this month. It is similar to watching a coil winding tighter and tighter. Typically price action breaks out 70% of the way into the structure, we’re well overdue now @ 82%.
The buy signal remains ‘incredible’. It is not the point of this signal to time the bottom but rather to measure the probable return versus risk of loss.
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6hr line chart going back to October. One of the rules of Bollinger Bands, 95% of all price action prints inside the band.
Circled in purple are the last times PA moved outside the band. It was quickly followed with a return to the mean (red line), currently around 41.5.
For today.. price action needs to close on or above 40.6k to maintain market structure. A WHOLE candle body closing under here would be a break of market structure on the daily chart.
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Some folks PM'ing me, going to 30k today? Man I don't know. However, consider this... $34500 is the absolute bottom it could possibly go today. How do I know? Because there is currently 2.3 million BTC on all exchanges according to Glassnode or just a tad under 93b. Take that off the current market cap and you get to 34.5k. After that there's no more BTC to sell, it has to be transferred to the exchange. According to Glassnode the volume of BTC leaving exchanges continues to increase in the weeks gone by, I therefore don't see that suddenly reversing today. The sell off is all retail money who keep their bitcoin on exchanges.
2.3m left to sell. Down from 3m this time last year when price action was at the same level! Think about that for a moment. This is going to cause an crazy upside rally, mark my words.
Honestly, if the above did happen it would be awesome, it would bring an end to the downtrend in single day.
Currently we have 8 oscillators including MACD (almost all of them) printing bullish divergence on the daily chart - look left!
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Buying the dip.. Tether Treasury just transferred $1,000,000,000 USDT yes billion to Binance a few hours ago.
You know if I could print my own dollars to buy bitcoin... wait one why can't I?
WWUSD that could work...
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PS: That wasn't the first, they've sent over multiple billions to Binance today.
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A very clear bullish divergence prints on the 1-day chart below. 41K will be the first resistance then 52K, the March target.
A much as it pains me to look at the very lower time frames, the 2hr chart yesterday (below) was a fascinating place to study during all the volatility. On the 2hr chart the capitulation volume is all to clear to see. Everyone is talking about price action going to 30k. It's a trap!
The floor was clearly set at the 33-34 area. (It was also day 6 since price action left the Bollinger band on the 2-day chart if that makes sense to you on another idea published recently).
Buy orders into the Hundreds of millions of dollars came out of nowhere at the 33-34 area. Was probably those Tether deposits across various exchanges we saw 48 hours ago. Well done sellers.
A head and shoulders pattern can be seen, a breakout above 37 takes price action back over 40.
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I think we're about to see a sudden leap up to the 41K area in the next 1-3 days. If another sell off to 35k area occurs, grab it with both hands. That's what I've been doing.
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Today is a special day, breakouts of price action and RSI resistance (purple circles).
Sellers, keep selling, you're going to need that cash to provide the rest of us with exit liquidity a few months from now.
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"I think we're about to see a sudden leap up to the 41K area in the next 1-3 days."
A few days out, nonetheless, the trend reversal is confirmed following the liquidation of 130m of short positions.
Should see a move to the 50k area in the next 7-10 days. Good luck.
@ich1baN, Indeed there is. With a 'incredible buy' signal. That signal did not even appear on the March 2020 sell off, which says a lot about the current sell off. The last time this signal printed was way back September 2019. Price action made a quick 30% move to the upside in the weeks that followed, which would be 54K today.
sashakusak
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This is exactly the idea I was looking to read today. As always, thank you! Your most recent update is very telling. We'll let today's full moon write the final pages of this chapter! ;)
Draig_Coch
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they are doing their best to break as many people as possible...... I feel no pain !!!! lol thanks for the update dude as always ....
MRKEP
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Thanks! Always look forward to your informative analysis. The MACD is still red on the weekly and I look for several solid bars of pink. Look left at July. IMO Feb will make a good entry point.
without_worries
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@MRKEP, i think you're correct about February. Hope to see some positive sentiment before then. The fearfulness is incredible.
Thanks for sharing.