Bitcoin's engineered liquidity and removal of weak hands
Good morning, traders. Hope y'all stayed safe during the move yesterday. There's a lot going on in this chart, but I wanted everyone to be aware of how we are watching price action play out.
As I discussed in yesterday's chart, and then expounded upon during the morning's live stream, there would be an attempt to push through the descending resistance line toward the horizontal channel's high but if that failed (if there wasn't any real follow through on the retail traders' side after C.O. started pushing price) then we would see C.O. put in a large sell order and remove their support to put a spring into action. This would test the available supply. A drop down on low volume would suggest that the market is ready to move up. However, a drop down on high volume would suggest the need for more accumulation.
We saw relatively high volume on that drop, so the expectation is to see more accumulation before another move up now and that's what appears to be happening at this time on a much smaller scale. Price's current position lines up with the bottom of the ascending yellow channel. If this holds and price continues higher, then we can expect a conservative target of the upper grey box at around $8900, though we could potentially see price reaching the top of the channel a few hundred dollars higher. As always, price does not have to remain within the channel. A strong bullish push often sees an extension beyond the top of the channel.
We can see price has printed a descending channel as denoted by the green lines with a descending broadening wedge inside of it denoted by the dashed red lines, and is being supported at the bottom of the previously drawn orange box within our grey box. This is creating a potential Swing Failure Point (similar to the Wyckoff Spring) within the smaller descending broadening wedge denoted by the black lines. A successful SFP will see price closing above that swing low (which it has done twice now). This should see price then pushing upward once it pushes through the top of the orange box. The red box (order block) above price is resistance, but a successful breach of the top of that box should see price rising back toward $8300. The only caveat is the mitigation block in green. Failure of price to breach the top of this block will see it dropping toward the next block at $7400/$7500. HTF is bullish, so the expectation is for price to continue higher rather than lower right now. But even if we see that drop toward the next block below, the expectation remains that we will head higher as it is another strong area and each of these blocks are full of long orders that didn't get filled the last time around just waiting to go long, so they are sucking up all of the orders that drop into them. Our final block becomes the $6800 area. Ultimately, failure of that area to hold is not good news for the bulls and we should expect to see price fall further at that point.
In terms of accumulation, the recent large white candle could be seen as a spring. That means we could see price potentially drop back down toward the dashed line around $7850/60 to test the spring's result before getting serious about moving upward. That successful test of the spring should then see price pushing up toward that red box at the top of the accumulation zone. This would potentially create an IHS which is a good indicator of completed accumulation especially as all this is happening in a support zone. The target on that IHS would be the top of the green mitigation box. At that point, a successful push through it indicates that demand is outpacing supply and price will rise higher. RSI looks great on most times frames as it is near/at oversold and printing potential bullish divergence.
As I discussed in yesterday's chart, and then expounded upon during the morning's live stream, there would be an attempt to push through the descending resistance line toward the horizontal channel's high but if that failed (if there wasn't any real follow through on the retail traders' side after C.O. started pushing price) then we would see C.O. put in a large sell order and remove their support to put a spring into action. This would test the available supply. A drop down on low volume would suggest that the market is ready to move up. However, a drop down on high volume would suggest the need for more accumulation.
We saw relatively high volume on that drop, so the expectation is to see more accumulation before another move up now and that's what appears to be happening at this time on a much smaller scale. Price's current position lines up with the bottom of the ascending yellow channel. If this holds and price continues higher, then we can expect a conservative target of the upper grey box at around $8900, though we could potentially see price reaching the top of the channel a few hundred dollars higher. As always, price does not have to remain within the channel. A strong bullish push often sees an extension beyond the top of the channel.
We can see price has printed a descending channel as denoted by the green lines with a descending broadening wedge inside of it denoted by the dashed red lines, and is being supported at the bottom of the previously drawn orange box within our grey box. This is creating a potential Swing Failure Point (similar to the Wyckoff Spring) within the smaller descending broadening wedge denoted by the black lines. A successful SFP will see price closing above that swing low (which it has done twice now). This should see price then pushing upward once it pushes through the top of the orange box. The red box (order block) above price is resistance, but a successful breach of the top of that box should see price rising back toward $8300. The only caveat is the mitigation block in green. Failure of price to breach the top of this block will see it dropping toward the next block at $7400/$7500. HTF is bullish, so the expectation is for price to continue higher rather than lower right now. But even if we see that drop toward the next block below, the expectation remains that we will head higher as it is another strong area and each of these blocks are full of long orders that didn't get filled the last time around just waiting to go long, so they are sucking up all of the orders that drop into them. Our final block becomes the $6800 area. Ultimately, failure of that area to hold is not good news for the bulls and we should expect to see price fall further at that point.
In terms of accumulation, the recent large white candle could be seen as a spring. That means we could see price potentially drop back down toward the dashed line around $7850/60 to test the spring's result before getting serious about moving upward. That successful test of the spring should then see price pushing up toward that red box at the top of the accumulation zone. This would potentially create an IHS which is a good indicator of completed accumulation especially as all this is happening in a support zone. The target on that IHS would be the top of the green mitigation box. At that point, a successful push through it indicates that demand is outpacing supply and price will rise higher. RSI looks great on most times frames as it is near/at oversold and printing potential bullish divergence.
Comment:
Current 4H chart is looking prime as long as price remains around this area. Printing strong bullish divergence on MACD's negative histogram and SFP is looking good currently. Also, adjusting the DBW to fit the 4H TF shows price hitting the third touch with a fourth to come at the top of the DBW which should be followed by subsequent upward movement as price breaches the pattern's resistance. However, we still have another 1H16M left for that candle's close.
Comment:
Just one more cleaned up update of what I'm watching now. The exact points at which price may or may not follow those arrows (corrective moves) may be off, but the overall general movement is there for guidance. Very large sell block remains at $8290 on Bitmex. If it moves now, then price should be good to go. Name of the game is risk management -- make sure you're utilizing it.
