Like every week, I review the previous week’s analysis and then explain my vision for the week to come.
Disclaimer: This article is not intended as investment advice or as an inducement to invest. It is strictly for informational purposes only. You are solely responsible for the trading and investment decisions you make.
Last Week’s Debriefing
It has been a rather quiet week. I was expecting a slightly more aggressive bullish comeback, but instead we stayed in a holding pattern. This is mainly due to the options markets expiring on Friday morning, but also due to the important international meetings to come this week.
What we can see this week is that we had candle wicks going north and south. They were mainly used to liquidate most of the people who were trying to position aggressively on this range.
Now for my opinion on what to expect in the next few days.
Analysis of the week
A rise? A fall? Both in the same week? No, I’m kidding, you know I always give my personal opinion at the end of my article.
The events of the week
As I said before, the week is going to be busy and hectic, especially at the professional level with many important calendar points. Indeed, in Europe we are waiting for: inflation figures, new applicable rates, but also consumer figures! Same thing in the US (with a bigger impact on the markets of course), where we are waiting for the rate figure which should be 4.625%. We are also waiting for the unemployment figures.
The rate figure is very important, because since the beginning of the bearmarket, it continues to rise. However, it is only expected to rise by 0.125%, when the FED applied a 0.5 to 0.75% increase recently.
This should also allow professional investors to be reassured and potentially resume buying positions in the markets, although ideally this curve should reverse (alas, this is not likely to happen).
Liquidity in Bitcoin and Ethereum
Liquidity is usually found near highs and lows. These are psychological places where traders place their maximum allowable loss.
What we see is that the red lines, whether on Bitcoin or Ethereum, are the last areas to come in and look for before having to make a really big move. So these are the “easy” areas to hit with a slight push. A push like this would hurt traders positioned on the downside, but also all the people who saw Bitcoin at $16k and Ethereum at $900 and still didn’t get in when Bitcoin and Ethereum will be at $25k and $2000 respectively. Indeed, more psychology, but it is psychology that drives the markets. So you have to recognize where people will suffer the most in order to know the direction of the market.
The green lines correspond to the liquidation of buying positions on Bitcoin and Ethereum.
The analysis of the long/short data and the quantities of open positions on Bitcoin for this week leaves something to be desired.
Why is this? Simply because the red and blue data are contradictory.
On the one hand the red arrows show that as soon as positions open (3ᵉ line), with a long ratio going down (2ᵉ line) then the Bitcoin price goes up (1st chart).
However, on the other hand, line 6, which represents spot CVDs (so money inflows generally in investment), goes down. This indicates that there is less money coming in, it is even going out, but the price continues to rise, which means that unlike the first surge to $22,000, it is indeed liquidations that are guiding us and no longer buyers.
What about altcoins?
On altcoins, we can feel a FOMO (=Fear of missing out) feeling that continues to take hold. This is not a good sign for a healthy long term rise. Meaning that we are surely soon at the end of the climb.
Traditional market: $SPX
The good news of the week is here, as we have finally broken, in standard and logarithmic scale, the downtrend line that has been acting as resistance for over a year. Beware! This does not mean that the bottom is in on the traditional markets; to confirm this, we will have to wait for a nice W-type structure on the other side of this line. However, this is still very good news.
A tough conclusion, but in line with my analysis from last week, we will in my opinion definitely break $25,000. However, be prepared, because there is a chance that this will be the top of the year 2023. As described in my four plans for this year, my favorite is the liquidity scrape at $25,000 before a retest of our bottom around as low as $18,500. Good luck to you and have a great (hopefully green) week.
Entrepreneur & Dad, passionate about cryptocurrencies, I describe for you the technical analysis.
My job: look at charts and interpret them for you.
Beware I do not know all the truths.