Market Overview: Bitcoin Futures
Bitcoin pullback finally became a reality after the price stalled at major support. Traders expect the price to reach $28800 during the upcoming months.
The Weekly chart of Bitcoin futures
- Traders still think that the Bear Trend on the Weekly chart is contained within a Trading Range; therefore, the Sell Zone is located at the Upper half of the Trading Range, not below prior lows (Buying Zone), which is where we are now.
- It is too early to call this a bottom.
- We will probably test the 2022 low during this year or during the following years, as discussed within the Semester Report some weeks ago.
- Last week we have said that this current bar should look like a Bull Doji or a Bull bar with a tail above, and this is what happened.
- This week is also the Follow-through Bar after a High 2, or Micro Double Bottom, Bull Setup.
- As the Follow-through is good (bull bar) we should expect buyers below the lows of this week.
- There are no dominant institutions selling around current prices.
- Stop Order Bulls do not have good math yet, as there are trapped Traders at $28800, Limit Order Bulls, who will add selling pressure early during this Pullback (taking profits on their lower entries and exiting breakeven on their 1st one).
- This is one of the reasons why we thought that the follow through after the last Bull Setup should not go very far.
- Dominant Stop Order Bulls on the weekly chart will not consider buying strongly until Limit Order Bulls exit.
- All participants, Bulls & Bears, have an interest in a Pullback, as all of them want to see what happens after Limit Order Bulls sell their longs:
- Stop Order Bears will consider entering below a bear breakout bar, expecting another leg down within the Bear Channel.
- Limit Order Bears will consider selling with limit orders above a bear breakout bar, expecting a test of the year low.
- Stop Order Bulls will consider buying after a failed new low of the year, with room until the upper half of the Major Trading Range.
- Limit Order Bulls will be inactive until new information gives them a mathematical edge.
- Next week is the close of the Monthly Bar, but the magnets are a bit far from current prices. June close and May low are the price levels that Traders will be looking at, in case there is a rapprochement.
- As this weekly bar closed at around the middle price of the bar, we can expect an Inside Bar next week. Another likely outcome, would be a Trading Range bar (tails on both ends).
The Daily chart of Bitcoin futures
- Bitcoin broke above the Bear Channel on the Daily Chart. 70% of Bear Channels Break to the Upside.
- 60% of the time, after a Bull Breakout of a Bear Channel, the price transitions into a Trading Range. 40% of the time, the price transitions into a Bull Trend.
- Last Week, we have said that the Pullback was not significant to stop the bears trying a resumption of the trend down. This week, this has changed: In my experience, when a near 50% retracement of a Bear Channel occurs, we are already in a Trading Range.
- There is a 60% chance that there are buyers below the low of the Bear Channel.
- Traders think that there is a 60% chance that below the low of the Bear Channel, there is a Bear Trap Zone.
- As the Bear Channel was very constructive for the bears, Traders are convinced that Trading Range Strategies have the best math: Buy Low and Sell High.
- Gaps closing is the hallmark of Trading Ranges.
- Bull Breakout Bars within a Buy Zone of a Trading Range do not have the best math when are traded with Stop Orders.
- The math is much better for those Traders buying with a Limit Order at the Low or below the Bull Breakout Bar: This is why we expect buyers around the low of 07/19.
- Friday was a Low 2 Sell signal bar: Good Bear Setups are Good Bull Setups if those are located within a Buy Zone of Trading Range. In fact, in June we were suspecting that we were within a Trading Range already because good Bear Setups were having bad results for the bears (early indications of a transition between a bear trend and a trading range).
- We should expect buyers below Friday’s Signal Bar.
- As there are Limit Order Traders buying below things, we should expect Trading Range Price Action over the next days: an increasing number of bars with tails.
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