Market Commentary (BTC):
Following a few weeks of consolidation off of the 453 $ spike high, the bitcoin markets are now getting their sea legs back. 350 $ ended up being the battleground level as bull and bears squared off there over the weekend. In the end, the bulls seem to have won this round as price has now broken back above resistance at 365 and 375 $.
As price approaches the critical 395 to 400 $ resistance zone, it will be interesting to see if there is enough upside momentum to get through there convincingly. If so, it could spell trouble longer term for the bears. If it fails again, down we go again, we think to test double bottom support at 320 $.
Market Analysis (BTC/USD):
Weekly Log Chart: Back to the weekly log chart for the longer term perspective. Not much change from last week, but you can see that price continues to get squeezed by the triangle trendlines, the 61.8% to 78.6% Fibonacci zone (OTE), and is also hugging the 100 day MA to the downside. Other things of note are the almost stupidly oversold Willy, a bullish MACD divergence, and volume profile that says much more price discovery needs to be done from current levels all the way up to 700 $. There is no telling when, or even if, this exploration higher will happen anytime soon, however it is something to keep an eye on.
The mention of the OTE above is a nice lead-in to our first educational segment. The “Optimal Trade Entry” (“OTE”) zone was an idea formalized by @InnerCircleTrader who was a former hedge fund/institutional trader. He realized that most professional traders were using this idea of the OTE as a key part of their trading systems, and decided to inform those of us who chose not to work for the big guys of this useful tool.
The main take away is that the OTE sweet spot typically falls between the 61.8% and 78.6% Fibonacci retracement levels. Usually, these Fib’s are drawn off of swing tops and bottoms, down or up to previous local highs and lows. Once price falls about 78.6% from a previous peak, might be a good time to look to get long. Vice versa, if price has retraced 78.6% of a previous selloff, might be a good time to look for short opportunities. You will see this tool used numerous times throughout these updates, so eventually it will become easy to spot these setups.
BTC/USD weekly log chart
Daily Chart: We also want to update the daily chart for a better look at the shorter term technicals. We will immediately reference the OTE long zone as it is probably the most critical characteristic of this chart at this time. You can see that price came down very nicely into the OTE zone, eventually bottoming just slightly below that crucial 78.6% level. This happens occasionally as whales like to cause fakeout panics at key levels such as this. Our shorter term analysis is good a catching these washout moves, fyi.
Anyway, we also want to note the downtrend wedge that price is now stuck within, as well as the volume profile PoC that price is exploring. This tells us that there is more room to the upside, however it also says that more chop at current levels would be healthy.
Additionally, you can see that on this recent decline, price went right down to touch the top of the lower trendline before bouncing smartly higher. Also, MACD is close to retesting the zeroline from below, the MA’s are squeezing price, Willy is neutral, OBV is holding the lows, and the Vix Fix is saying the 275 $ low was a good, medium term low.
BTC/USD daily chart
Happy trading! Have a great BITday!
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