VictorCobra

Bitcoin Tests Liquidity At $46k After A Massive Short Squeeze

Long
GEMINI:BTCUSD   Bitcoin / U.S. Dollar
It's very possible that I'll be proven correct in my analysis where I stated that the death cross may not matter so much this time around. Here is the original analysis, where I compared Bitcoin price to Amazon stock:
The fact that Bitcoin has broken the 200 day MA (teal) is already a positive development. Just look at what happened after the death cross in 2018:
Bitcoin failed to even test the 200 day MA after the death cross and rolled right back over to support. Compare this with today.
Bitcoin will ideally need to continue holding above the 200 day MA (just below, near $45k) to pick up enough bullish momentum to break the all-time high. On a larger correction, I do not want to see Bitcoin drop below the 100 day MA (yellow), which had held as support since October, 2020 until it was broken this past May. The 100d MA currently lies around $38.7k. If our 2021 "bear market" is to continue, we should see price get rejected in this liquidity zone and head back down towards the $29-30k support. Breaking decisively below $38k again would be a sign of weakness. Then, I think Bitcoin can test the lower liquidity zone between $13-20k, as noted on my chart.

Over a month ago, I wrote an analysis about the importance of the $46-65K liquidity zone, and why I thought we could end up there BEFORE seeing any new lows. Here's the original analysis:
When I wrote that analysis, I had finally started feeling bearish /neutral on the market. My sentiment was starting to turn pretty sour. However, I continued to rebuy a little at those levels, which went against my emotions. It's now paying off. I had also planned to reduce some risk once Bitcoin reached $46k again, depending on how strong the market looked at the time. The market actually looks stronger than I had expected on a bounce, so I'm going to hold off a bit. Just a few weeks ago, hardly anyone on here was expecting new highs later this year. Nearly all the charts on the front page pointed to a major breakdown below $30k.

Regardless of how you draw it, Bitcoin has now broken the curved resistance I've been watching for months. If you press play on the liquidity idea from late June, it looks like a perfect breakout and retest. The way I've drawn it for this current analysis has the most touches, and it shows the breakout occurring just after the bear trap below $30k.

Now we have a variety of different options. Below is what I'd expect if the bull market suddenly continues. I drew this trajectory towards the end of July:
Of course, the above is completely speculative, and is essentially an "ideal" scenario. It likely won't play out that way at all.

Again, on the bearish side, I want to see the 200 day MA become support again, and for the 100 day MA to be held on any larger corrections. I also want to see a golden cross occur in September or October, which would validate my original idea that using the death cross is not useful in assuming any further downside. Instead, the death cross just tells us about bearish price action that has already occurred.

This is not financial advice. This is meant for speculation and entertainment only.

A couple of reminders:

1) I am working on a podcast!

2) I am partnering with Mudrex - if you wish to support me you can sign up using my referral (linked below). I've been doing this for some years already, and it's time I start thinking about how to make this more sustainable for me in the long run.

-Victor Cobra






Comment: So now Bitcoin has begun correcting. Back below the 200 day MA, but that's alright as long as the 100 day holds. Ideally, Bitcoin maintains above 41kish. Even more bullishly, Bitcoin can find support at the 9 day MA, just below 44k. Support can be found almost anywhere at this point, but probably important to be patient. Volume is declining as price drifts down from major resistance, which can be a bullish signal. Buyers aren't ready to step in above $45k yet, but sellers aren't confident yet either. This is my yellow trajectory zoomed in, showing how I speculated about a move to 46k before consolidation.
Comment: If Bitcoin can continue consolidating here and generally hold the 200 day MA on a daily closing basis, that would be a pretty bullish setup. Funding got a little overheated on alts so consolidation here makes sense. If Bitcoin closes below the 200 day, I think the likelihood of a bigger retrace will increase.
Comment: Pretty important confluence of supports here. Nearing that purple trendline, as I speculated could happen before any attempt at new highs. Not looking macro bearish yet, but I don't really want to see a daily or weekly close much below $38k.
Comment: It would be nice to see the 100 day MA held (yellow). But if things get worse for global markets, we may have a black swan event that could take Bitcoin to some new lows ($24k is a possibility).
Comment: This would be an interesting support/resistance flip if this level holds. Otherwise, there's mostly air between here and $35k.

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