BTC / USD
Please find below our technical analysis for BTC$. We will start with longer timeframes, and then work our way down.
When we focus on the bigger picture, our first indicator is the Ichimoku cloud. The cloud turned bearish when we were rejected the 3rd time just below the 12k mark. You can also see that the base line (blue) worked nicely as a resistance line. From the 12k level down to 3,700 we only dove three times into the cloud (red zone) with the last dive happening just two weeks ago.
Our second indicator is liquidity. First, we look at overall liquidity/volume on the time axis (volume bars in red and green at the bottom), and then at price volume on the right-hand side (bars in blue and yellow). The price volume bars depict the so-called liquidity pools. The large pools are sitting in the „high volume range“ between 6,000 and 7,000, and the other ones are a bit lower in price between 3,600 and 4,000.
The next indicator is the funding rate (or, in other words), the shape of the term futures curve. This indicator is only meaningful for BTC as other crypto assets do not have a liquid derivative market. Here, we get a sense of how convinced market players are in putting more shorts or long positions on their books.
Currently, we see funding rates swinging back from being fairly negative to neutral, with a similar move in the term futures coming heavily in backwardation toward a flat curve. This means that they are close to where spot is trading. What we have observed is a rather bullish signal as it looks like the bears (sellers) are running out of steam.
And last but not least, we use the classical pattern analysis of support and resistance lines, triangles, and more complex patterns such as head and shoulder formations. Our current possible pattern is a triangle formation (black lines). In most cases, a triangle is a continuation pattern, meaning that the prevailing trend should continue. In rare cases, a triangle formation can also dissolve into a trend reversal. We might have such a case, since we broke out to the upside (into the Ichimoku cloud) and retested the upper leg of the triangle. To be honest, if we do not see a spike higher over the next few days, I will disregard this pattern.
Now, let’s combine all the findings to see our high-probability outcome backed by the above analysis.
The market is still bearish on a daily time frame. This is displayed perfectly by the large red Ichimoku cloud. We see some hope for the bulls due to the fact that we pushed into the cloud and traded just above the base line (blue). We have not reached a higher high yet, but we might have formed a higher low. Our possible triangle formation can only get taken into account if we see a spike soon. The bottom line is that we will not see a bullish case until we clear the first resistance at around 4,200.
Now, let’s zoom into the daily chart. This will shed some light on the so-called danger zone, or the level where a few important levels come together (converge). Yesterday, with the small sell-off, we pushed through the base line (blue line) and stopped right at the lower band of the Ichimoku cloud. Additionally, our upper leg of the possible triangle comes in at that level, and more importantly, the upper band of our accumulation zone is also right there. We think that if we break through 3,600-3,650, the remaining bulls will throw in their towels, and we could see a dump deep into the accumulation zone: down to 3,250.
Here we see the confirmation that yesterday’s sell-off was the trigger for the Ichimoku cloud turning bearish (red). Actually, the warning signs already lit up when we got the rejection from the 4,200 level and pushed straight through the base line (blue). In this view, it is also more visible where the liquidity pools are (volume bars on the right-hand side). We are right in the middle of two bigger pools. There is one at around 3,800 and the other is at around 3,600. They will work like magnets to the price, and we expect to see some stop losses getting triggered if we cross those levels.
Combining these three views, we think that the risk is rather skewed to the downside. Looking at the bigger picture, we would only turn neutral to bullish if we break the 4, 200 resistance. Regarding a shorter time frame, the 3,900 level might trigger a quick push up to the 4,200 level, but the risk remains that we will see another rejection.
To add to a short position, we need to see a clear break below the 3,550 level.Weiterlesen