Market Update – Patiently Waiting For The Fireworks
Bitcoin price action has continued to be relatively listless in recent weeks. On lower time frames it has been choppy, and high timeframes slowly trending down before ranging after last week’s wider markets COVID scare.
The result is that market participants are becoming fearful that the bull run may be over. This is reflected in the general crypto fear and greed index score, currently at 31 in the ‘fear’ zone where it has resided for the past week.
Figure 1: Crypto Fear and Greed Index showing the market is currently fearful.
This uncertainty is resulting in a lack of clear trend in Bitcoin’s price action. The Predator Indicator and Terminator indicator highlight this market confusion across the lower timeframes of the 1hr and 4hr.
Figure 2: The Predator Indicator across timeframes.
Ultimately we note that the 3-day Predator remains red which is bearish. For us to have greater confidence of a trend reversal we want to see this turn green before we believe a significant and sustainable upturn is possible.
Key Support and Resistance Levels
When $BTC does break out of its current narrow range, there are key resistance and support levels to be aware of. The most obvious support cluster lies around $52,000 – $53,000 with Moonraker support (dotted green lines), 128DMA, and the point of breakdown level from the May crash earlier this year all in that area. Perhaps it is now a little too obvious to get hit.
Figure 3: Key support and resistance levels
Should we get a deeper correction then a strong support area lies around the 200DMA at $46,200 and the lower Moonraker support level (green dotted lines) at $44,300.
To the upside, a significant resistance level lies at the round number of $60,000. Both Moonraker resistance (red dotted lines) and the previous lower high are at this point.
Not yet back in macro bullish range
In addition to the resistance levels just mentioned, the $60,000 area is also an important weekly level formed from the weekly close earlier in the year. After a fakeout above this level last month, we are now back below having got rejected off it the previous two weeks. Bulls want to see a confident weekly close above this level to re-ignite hopes of bullish continuation towards the $100k meme level.
Figure 4: Price is now back in the macro neutral area after a recent fake-out.
If price action remains stable going into the weekly close then Predator will be amber following last week’s chop candle (highlighted by the white dot over the candle).
Balance on exchanges
This relatively weak-looking near-term price action is at odds with a number of other metrics which continue to look long-term bullish for Bitcoin. One example balance on exchanges which after a brief bump up last week is now trending back down again, close to making new all-time-lows. This is generally regarded as bullish as Bitcoin holders take their bitcoin off exchanges to put it into cold storage. Thereby reducing the short-term potential supply available to sell quickly on exchanges.
Figure 5: Bitcoin balance on exchanges continues to drop
1yr HODL wave trends up
Despite the volatility of recent months and the recent downtrend in price action, we have actually seen a small increase in the 1yr HODL wave. The 1yr HODL wave shows that of all Bitcoin ever mined 54% have not moved on-chain for the past 12 months.
Figure 6: 1yr HODL wave is now increasing.
This suggests that long-term holders remain unfazed by potential bearish news and are continuing to HODL strong. While there is no guarantee of a repeat, we saw a similar situation in 2013 as price ‘crashed’ while 1yr HODL’ing increased, before $BTC took its final major leg up to $1,200. This has to be regarded as a bullish signal because it reduces short-term available supply to the market, and also signals the intent and increasing positive belief of long-term holders of Bitcoin.
As Bitcoin lags, Ethereum price action is defying all the CT hate about high gas fees and continues to trend up.
Figure 7: ETHBTC continues to climb higher.
After a brief fakeout below the accumulation funnel we have been using at Decentrader, ETHBTC has since rallied and is trending up. Predator 3-day is green and despite a pullback the past couple of days, we continue to think that ETH can at least run-up to the 0.09 level if not beyond in the coming weeks.
Reaching 0.09 will be a 27% uplift from an initial bullish update we gave on ETHBTC in the Decentrader analysis channel two weeks ago.
The driver behind ETHBTC performance is the relative strength of ETH as BTC ranges.
Figure 8: Ethereum has shown greater strength this past week.
Having now retested the top of a rather ugly ‘W’ pattern, we expect ETH to break above its previous ATH and run to the 1.618 fib level area at $5,450. Should it get there, that would be a 20% move up from the current price.
Fireworks in Mid-December?
Despite the somewhat sluggish price action over the past week or so, we may be in for some fireworks as we head into mid-December. Our very own analyst Philip Swift (@positivecrypto) posted this tweet yesterday highlighting how mid-December has been a pivotal period for Bitcoin (and crypto) over the past 5 years.
Send It Or End It? #Bitcoin
15-19 Dec ‘16 = Start Parabolic Run
15-19 Dec ‘17 = Cycle Top
15-19 Dec ‘18 = Cycle Bottom
15-19 Dec ‘19 = PlusToken Bottom
15-19 Dec ‘20 = Broke Previous ATH ($20k)
15-19 Dec ’21 = …………………? pic.twitter.com/Q7tjHfkUCj
— Philip Swift (@PositiveCrypto) December 2, 2021
Whichever direction the market moves, we do expect strong volatility as we move further into December. So it should be an exciting Christmas and new year period for crypto!
The Decentrader Team.
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Disclaimer: Nothing within this article should be misconstrued as financial advice. The financial techniques described herein are for educational purposes only. Any financial positions you take on the market are at your own risk and own reward. If you need financial advice or further advice in general, it is recommended that you identify a relevantly qualified individual in your Jurisdiction who can advise you accordingly.