Through The Eyes of the Market Maker Part IV: Range or Stop Run?
Overall, I am expecting BTC to range between 4600 to 4900 over the next few days and maybe longer.
BTC has had an unexpected rise this last few days. Normally BTC will fall within an hour to a few hours if we are seeing a massive squeeze on shorts, so I'm thinking we could see the range as mentioned above.
My opinion is that the MM found that retail was not very interested in trading BTC while in the 3 to 4K range so they allowed price to be pushed up into the 4 to 5K range. Many people I know in the space are getting requests for TA lessons and other services this week that they were not getting last week, so the general market may be waking up a tad with last week's 35% (ish) overnight run from 4K to 5300. Even the HODLER youtube channels are giving their initial "I told ya so" videos, which is a massive sign and can also spurn more new money into the market.
The question is: Is this a giant liquidity tap or are we seeing a new value area being built in the 4 to 5K range? Word on the street is that a 20K BTC algo buy order was triggered ice-berg style across a few key exchanges which caused a price run cascade to the rest of the market. The Market Makers didn't sell into it as much as they could have which makes me question their motivation. Do they want to build some longs up in the 4 to 5K range so they can slam it back down and take profit on a short? Or are they filled up nicely from their accumulation in the 3K range and ready for a run upward? There is no real way to answer THAT question, but there is certainly a way to trade around it :)
Looking at Daily FX's IG Client Sentiment (source posted at end of article), they say the following:
"Retail trader data shows 79.7% of traders are net-long with the ratio of traders long to short at 3.93 to 1. The number of traders net-long is 2.3% higher than yesterday and 6.7% higher from last week, while the number of traders net-short is 5.3% lower than yesterday and 4.2% lower from last week."
IG Client Sentiment is a contrarian school of thought, but their overall signal is mixed according to their BTC icon/box at the top of their page. Verbally, their info has them as thinking price may sink in the short term. Right now retail longs are nearly 4:1 according to their wider market data and they normally think price will fall based on such a ratio. I have not empirically documented the BTC trends performance history in correlation to their bias, but I can anecdotally remember a couple times recently when their outlook was "mixed" and price went up or ranged. That does correspond with what I am seeing as possible and the current price action and order book action has retail willing to buy around 4750 BTCUSDT Binance price. We could eventually wick below this area and current price seems like it is getting close to doing so.
The chart below reflects the Bitfinex open interest in a timeline comparison to BTC on the H4 chart. To look at Bitfinex longs/shorts ratio, we are at 55% long, 44% short. I have also charted the longs/shorts trend. I feel longs trend is a great "greed" sentiment meter and shorts trend is a good "fear" sentiment meter. Right now, longs are greater than shorts, but the shorts are not decreasing while the longs are. in fact, shorts are recently increasing over the past day while longs remain stagnant. This shows me the TREND is towards fear. This makes sense since we just hit a nice high and have retraced a bit. I would guess that a ranging market over the next several days would even things out trend-wise. As of yet the bulls are still louder than the bears as far as Bitfinex open interest is concerned. See chart below:
Therefore I believe there is a good chance that price will range for at least a few days and possibly give alt coins a chance to breathe. As a lower limit is established, I will begin to flesh out my stop losses and my plans.
IG Client Sentiment Source:
www.dailyfx.com/sentiment
***Any information represented here is my opinion only and not intended to be used for financial gain. None of the information posted here is to be considered financial advice. Information posted here is strictly for entertainment purposes only. Please consult your financial professional before making any kind of investment. Investments can be very risky and any investor should educate themselves before investing by enlisting the help of a licensed financial professional. Past results are not indicative of future results in any construable way.***
BTC has had an unexpected rise this last few days. Normally BTC will fall within an hour to a few hours if we are seeing a massive squeeze on shorts, so I'm thinking we could see the range as mentioned above.
My opinion is that the MM found that retail was not very interested in trading BTC while in the 3 to 4K range so they allowed price to be pushed up into the 4 to 5K range. Many people I know in the space are getting requests for TA lessons and other services this week that they were not getting last week, so the general market may be waking up a tad with last week's 35% (ish) overnight run from 4K to 5300. Even the HODLER youtube channels are giving their initial "I told ya so" videos, which is a massive sign and can also spurn more new money into the market.
The question is: Is this a giant liquidity tap or are we seeing a new value area being built in the 4 to 5K range? Word on the street is that a 20K BTC algo buy order was triggered ice-berg style across a few key exchanges which caused a price run cascade to the rest of the market. The Market Makers didn't sell into it as much as they could have which makes me question their motivation. Do they want to build some longs up in the 4 to 5K range so they can slam it back down and take profit on a short? Or are they filled up nicely from their accumulation in the 3K range and ready for a run upward? There is no real way to answer THAT question, but there is certainly a way to trade around it :)
Looking at Daily FX's IG Client Sentiment (source posted at end of article), they say the following:
"Retail trader data shows 79.7% of traders are net-long with the ratio of traders long to short at 3.93 to 1. The number of traders net-long is 2.3% higher than yesterday and 6.7% higher from last week, while the number of traders net-short is 5.3% lower than yesterday and 4.2% lower from last week."
IG Client Sentiment is a contrarian school of thought, but their overall signal is mixed according to their BTC icon/box at the top of their page. Verbally, their info has them as thinking price may sink in the short term. Right now retail longs are nearly 4:1 according to their wider market data and they normally think price will fall based on such a ratio. I have not empirically documented the BTC trends performance history in correlation to their bias, but I can anecdotally remember a couple times recently when their outlook was "mixed" and price went up or ranged. That does correspond with what I am seeing as possible and the current price action and order book action has retail willing to buy around 4750 BTCUSDT Binance price. We could eventually wick below this area and current price seems like it is getting close to doing so.
The chart below reflects the Bitfinex open interest in a timeline comparison to BTC on the H4 chart. To look at Bitfinex longs/shorts ratio, we are at 55% long, 44% short. I have also charted the longs/shorts trend. I feel longs trend is a great "greed" sentiment meter and shorts trend is a good "fear" sentiment meter. Right now, longs are greater than shorts, but the shorts are not decreasing while the longs are. in fact, shorts are recently increasing over the past day while longs remain stagnant. This shows me the TREND is towards fear. This makes sense since we just hit a nice high and have retraced a bit. I would guess that a ranging market over the next several days would even things out trend-wise. As of yet the bulls are still louder than the bears as far as Bitfinex open interest is concerned. See chart below:
Therefore I believe there is a good chance that price will range for at least a few days and possibly give alt coins a chance to breathe. As a lower limit is established, I will begin to flesh out my stop losses and my plans.
IG Client Sentiment Source:
www.dailyfx.com/sentiment
***Any information represented here is my opinion only and not intended to be used for financial gain. None of the information posted here is to be considered financial advice. Information posted here is strictly for entertainment purposes only. Please consult your financial professional before making any kind of investment. Investments can be very risky and any investor should educate themselves before investing by enlisting the help of a licensed financial professional. Past results are not indicative of future results in any construable way.***