Market Video Report: Bitcoin
Duration 18:08 mins.
Summary
Bitcoin‘s weekly chart shows a bull micro channel ending, shifting the market to a pullback state despite remaining “always in long.” The daily chart reveals a wedge top and trapped bulls near $81,000. A trading range between $72,000 and $82,000 is expected, with a potential downside target of $68,000.
Transcript
Hello everyone and welcome back to this week’s Bitcoin price action analysis. My name is Josep Capo and I am a trader, a certified financial advisor in the European Union, and an author for the Brooks Trading Course website. Thank you for joining us today as we take a look at both the weekly and daily charts of Bitcoin.
Here we’ve got the weekly chart of Bitcoin. And last week we were discussing that this bear bar was trading below the previous week’s low. So the low of this bull bar. This bull bar was the sixth bar—one, two, three, four, five, six bar—in a bull micro channel. And the bull micro channel ended because this was the first bar trading below the previous week’s low, and hence a pullback started in this bull channel. Whenever there is a strong channel or a micro channel, especially this one that has one, two, three good bull bars. There is also dojis and bars closing below the midpoint, but still bulls were strong enough to set the market to always in long.
Now whenever there is this kind of setup, bulls will try to buy and bet that there will be some kind of second leg up. Therefore, they will look for ways to buy. But certainly, buying below a strong bear bar is normally not the best idea. And this week, the market is printing not a huge bear bar, but it’s a bear bar closing around this low. So, it’s a good bear bar at the time of recording this video. And hence bulls will likely not buy neither below neither above this bear bar. So bulls are now likely not engaging with what followed after the setup, which means the market doing a bull breakout or a bull micro channel. If for example instead, the price this week were to reverse up and close near the high, that will be a decent buy in this case because it will be considered that this breakout—this bear bar—is failing. So it will be at least something good for, or not bad for, the bulls and bad for the bears.
All right. So, where is the price going? What is the price doing? The price will likely try to test either the $90,000 level, which is the middle third of this previous bear flag, or will come down to the $68,000 because it’s the middle third of the previous range. The market naturally falls into those levels or states—middle third of previous ranges. The price falls at, to, or tends to go to these levels because it’s already known that there was participation, and the market is going to go where most participants are willing to change buys and sells. Because that’s what the market does. That’s the purpose of the market; it is to find buyers and sellers. So it is going to go naturally there.
Now if you are a trader, what you are wondering is whether we are going to go first to the $90,000 level or to the $68,000 level. I would have said that this is a good sell above this bear flag, so selling above this high or looking to sell around the breakout point of the previous bear flag. But the truth is that this not becoming a bear bar, or this becoming a strong bull bar, confused my shorts. And if I, for example, would have shorted with a limit order at the high of the bear flag, I would probably exit above this bull bar because it disappoints me. So I think there is a chance that the market is just going to reverse up from this breakout point because there were sellers that sold with a limit order there and they were disappointed around here. So I will say that this breakout point is some kind of support right now, and yeah, I think that many bears will be disappointed by this bullish strength. It is true that it’s not a huge bullish strength, like for example when you see something like that, where you see bulls are stronger. But still, I think they have been consistently good enough to flip the market to always in long.
So now I think that I’m confused, which is something normal when both bulls and bears have their chances and their options. And the actions that I think that traders can take, it is for the bulls: if the price ends up reversing, closing near the highs—disappointing all these bears—I think that bulls can try to rejoin again for a second leg. But I also acknowledge that if bears are strong around these prices, maybe there will be a second leg down that will be good to sell. Because at the end, we are going to witness and understand better that at these levels there were a lot of bulls that are now trapped into their trade. So there were trapped bears here and trapped bulls above.
The market has some bullish pressure from bears that sold with limit orders there and their shorts are now going. If you want to exit your short, you have to buy back your short, so it is bullish pressure because you’re going to go long. And bulls that bought there are going to sell, so this creates some kind of bearish pressure because they are going to sell their previous longs. So there is a bit of these synergies up there. If I’m looking at the weekly chart right now, I would prefer to look to buy because for me it’s easier to structure a trade when you see some kind of bull breakout like this rather than betting against it, which is harder. And by the time the market becomes again always in short, you already reached your target, so it’s harder. So yes, definitely this is a bit what is now being discussed by traders.
I think it is a good moment to move to the daily chart right now. But before, let me again talk about the live trading workshop that will take place in Macau. And if I’m not wrong, there are few spots available already to see and watch professional traders like Al Brooks and Tom Hougaard, along with other traders like Tim Stoddard, Luis Wang, and Price Action Rose. All of them are great traders. You are going to watch them trading live and learn a lot from them. And there will also be Richard and Team Fairweather trying to give their best to make your experience beautiful. So if you are thinking about joining the live trading workshop, it’s time to contact us and be informed about it because there will not be many seats available very, very soon.
And before the daily chart, let me also tell you that if you are serious about trading, if you like the financial markets and you would like to trade them, you will need to learn how to do it independently. You cannot follow others’ advice. Our videos are here to fill the gaps in your understanding, but at the end, the decision will be made by yourself whether to buy or sell. You have to understand how the market works and how you can structure your positions. And if you would like to learn how to do that, there is the Brooks Trading Course, and you can find the link in the description if you want to join our community. It is something that you will never regret. Also, if you have any personal inquiry, you can write me at [email protected].
And finally, the daily chart of Bitcoin. I have drawn a couple of wedges—this one, two, three wedge top with the market creating kind of a double top lower high. I told you last week that I didn’t see this lower high as a good sell, so look, I was wrong. But my point is that this bull trend was never a small pullback trend because a small pullback trend doesn’t have climaxes. But still, the market was trading well above the previous range, and buyers that only bought low in the prior price action were now accepting to buy higher. So there’s a change in value perception.
I think that the most likely scenario right now—I can be wrong of course, but if I have to bet for a scenario—is that we are in a trading range here. I think that traders are going to look to buy the lower third of the range, so I think that there will be some kind of upwards reaction here. And I expect that—look at this red box, this red box is like some trading range. Bulls and bears engaged there, and if we go to the most overlap area, which is around let’s say $81,000 or $80,000. This is where most bulls that bought higher are now very disappointed because of this bear channel, continuation, or trend down. So bulls are now trapped, and that’s why I marked it here in a red box.
Therefore, I believe that the market will come back here because even though there was some kind of bearish price action here, the bulls accepted to trade higher and they were fine upwards. So I think they are now in trouble, but since there was price action here, I think there will be a chance for them to exit. But of course, what happens when they exit their trade is that they are going to sell their longs. Thus, we know that there will be some kind of bearish pressure up there, and hence that makes me think that the market will just come back down and stay here in this area. So, between $72,000 and $82,000 for the next couple of weeks. That will be my bet.
Now let’s see what price action does, because if the price moves down, the bear target we know is $68,000—the middle third of this previous range. And it can also happen that bulls strongly go up, break up, and whatever. We will analyze price action as it evolves in real time. But if I have to bet for a scenario right now, it is that we are in a trading range. We are in an area to buy low, and here there are trapped bulls, hence if there is a move higher, then the price will also come back again here.
So, this is basically all I’ve got for you today. I hope you enjoy the content, and thank you so much for engaging in the comment section week after week. I would also like to tell you that there is a transcription of this recording on the website. If you don’t understand me because I am not an English native speaker, you can follow the words directly there, and that might be easier for you to follow my analysis. And if you have any questions about this price action analysis, I will be more than happy to try to answer them the best way. Do not forget to like and subscribe if you enjoyed the video and if you want to see more quality content on the Brooks Trading Course website. Thank you so much. Have a very wonderful Sunday and a good week ahead. See you next week.
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