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Sunday, January 15, 2023

Why I believe that this Bitcoin "bull run" isn't sustainable

Why I believe that this Bitcoin "bull run" isn't sustainable

Bitcoin / U.S. dollar BITSTAMP:BTCUSD

Hey Tradingview Crypto community!

I am back with my Technical Analysis on Bitcoin . Today I am going to share with you a few reasons why I believe that the latest Bitcoin run
is a fake "suckers rally" and a short-lived bulls market pump.

Reason 1: Looking at the Bitcoin Futures Long vs Shorts positions, there was a huge number of bears trying to short market at $16,500. After the last Bitcoin drop and since 09 Nov 2022 Bitcoin price has been moving sideways within a very narrow channel for almost 2 months. It was quite obvious that a huge wall of Short orders with many traders waiting to profit from the next drop would not just easily happen. Before the next major capitulation that is normally around 40%-50%, market makers pushed the price up to liquidate all Short positions before getting ready for the next leg down.

Reason 2: If you look at Relative Strength Index ( RSI ) on a weekly timeframe - it is sitting in an overbought area and above its upper band. The last time this happened was before corrections in January and November 2021. Today Bitcoin RSI has already reached its peak and price of Bitcoin is due for correction after $4,000 pump.

Reason 3: 21 Exponential moving average (purple line) on a weekly timeframe - the Bitcoin price has pumped above the 21EMA which is quite significant indicator of the bull/bear trend. The last time this happened was in March 2022. However, the Bitcoin price has failed to turn it into support level and after a couple of weeks time it has begin its downtrend move. Its important to watch this level and see where the Bitcoin weekly candle close will be tomorrow. Perhaps, the week will close above the 21 EMA . However, we should watch this level for the next couple of weeks to see what direction Bitcoin will take. With all macro economic downturns and uncertainties I am more biased to the downside. However, we could see another leg up to #22,500-$24,000 just to liquidate the remaining Short positions.

Reason 4: 200 daily MA moving average on a daily timeframe (green line) - the Bitcoin price being above 200MA on a daily or weekly timeframe would signal that there is a potential for the change in trend and bull run is around the corner. On the daily timeframe , similar to scenario with 21 EMA , the Bitcoin price claimed above 200MA. The last time it tried to do that was back in March 2022 but then it failed. If we look at the weekly timeframe , price of Bitcoin is still below the 200 MA. The average 200 day price of Bitcoin sits around $24,000-$24,500 and this is where Bitcoin is heading towards.
Once again, lets watch the Bitcoin weekly candle close tomorrow and then monitor the price for the next couple of weeks.

If Bitcoin price fails to stay above both 21EMA and 200MA then the next drop is imminent. This might take few weeks time. I see another short term pump to another stop loss level on the short side before going down.

For me this is a good opportunity to DCA sell my recently accumulated BTC long term position and hopefully re-buy it at the lower levels.

Take this analysis as a pinch of salt and DYOR before making any decisions.

Stay Crypto and don't forget to like and follow me here!

Via TradingView Ideas

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