Bitcoin Always in Short on Daily Chart

Market Video Report: Bitcoin

Duration 5 mins. AI is voicing Josep Capo’s original script.

Transcript

Today, we are going to discuss the monthly, weekly, and daily charts of Bitcoin.

Let’s begin by the Monthly Chart

The monthly chart is in a bull channel that is reversing down from resistances. The resistances Bitcoin faces on this high timeframe chart are:

• The wedge top and the measured move based on the height of the 2022 major drawdown.

Since 2023, the market has been trending upwards, completing 1, 2, 3, and 4 legs up. The gaps between higher highs and higher lows have been shrinking until the last bull leg closed the gap, which is not a good sign for bulls expecting continuation of the bull trend.

By reaching the top of the macro wedge, the measured move target, and a failing 4th bull leg, we can say that major price action structures have been completed, and hence, the market is likely in an early stage of a breakout mode pattern.

Breakout modes are small trading range formations where the price seeks balance, with neither bulls nor bears having absolute lead. Finally, the result is either a larger trading range or a trend.

Since there is an open gap around the $75,000 area, I believe that is the major support.

So far, October is a huge bear outside bar that is reversing down from the all-time highs and is now approaching the 365-day moving average, which would be the first support. $100,000 is relatively near the current price, so I believe it will be tested soon.

For the bulls, it is harder to imagine a scenario currently with the available information, despite looking to buy at the $75,000 area.

For the bears, this may be the beginning of a $20,000 – $30,000 down move, and it may make more sense to either position short or hedge long-term Bitcoin holdings.

In summary, I expect a trading range pattern to develop between $75,000 – $125,000, a $50,000 range. I do not expect an 80% drawdown from here, but this is potentially the start of a 40% drawdown.

Now, let’s zoom in the weekly chart.

At first glance, the bull channel is clearer, defined by a bull trendline at the top and the 365-day moving average at the bottom.

Currently, the price is attempting to break down from a 13-week trading range. I believe the market will reach both $100,000 and the 365-day moving average.

However, I don’t expect a significant downward move yet; a sideways movement seems more likely. This is due to the prior week’s bar having a large tail, the week before that being a poor sell signal bar below, and the supports we mentioned—the moving average and the $100,000 level.

As a bear, I’d prefer to sell a lower high major trend reversal instead of a bear breakout, given the issues noted. Since this week’s and the prior week’s bars are surprisingly bearish, I believe a high 1, or a first pullback toward $110,000, will be sold.

I’d hesitate to buy at the moving average or $100,000, as the chart appears bearish in the short term, based on recent weekly price action. A bull reversal from there might be worth exploring, but I wouldn’t bet on bulls immediately.

My current strategy is to focus on structuring bear trades around the $110,000 level, expecting it to hold. I see support around $100,000, but given the strongly bearish weeks and the potential for a larger correction on a higher timeframe, caution is warranted.


And finally, zooming into the Daily Chart: 

The market is clearly “Always in Short.” A 4-bear micro channel is forming within a second leg down. I believe this micro channel is strong enough to expect another leg down.

Notably, after a strong bear breakout below the 30-day moving average, bulls failed to retest it, leading to the 4-bear micro channel.

The price broke below a buy zone, which may now act as resistance, especially if bears test $100,000 or consolidate bear bars below it.

For bears, selling around $110,000 or a test of the 30-day moving average is a reasonable think to look for. Selling at current prices is risky due to a distant stop and nearer reward at $100,000.

For bulls, I wouldn’t buy bull signals yet; they’re more likely to be sold than bought. The best outcome for bulls is sideways action. However, if the market shifts to “Always in Long,” bulls may then look to buy.

---

Market analysis reports archive

You can access all weekend reports on the Market Analysis page.

---