January 23, 2022

Fear Near Support - Tech Analysis from January 6, 2022

Volatility and trading volumes are back; it's time to turn our attention to bitcoin again. Unfortunately, volatility is downward, but nothing that would go beyond what we have discussed here or considered as a potential scenario. About the levels of $ 42 thousand and $ 53 thousand as the most significant I wrote here from start December, not less.

The prevalence ofdesperately bearish sentiment near the support of $ 42 thousand. The reaction of people in this is predictable and can hardly be blamed for it. Losses, even “paper” ones, are always unpleasant. I, too, would prefer if the price just rallied, but the market actually quite often takes the route of maximum pain for traders. However, from a "technical" point of view, nothing really special has happened ... yet.


Here is the expression of fear that is to be expectedis present at the lows of the range. The alternative.me Fear and Greed Index is approaching infrequently seen lows, which often happens at good levels to buy in the long term. This does not mean that the price will definitely not go lower, obviously, but it often means that the bottom is close, especially if you are ready to wait a little and buy a little lower.

Speaking of waiting, there is some dilemma foranalytics: on the one hand, it makes sense to deliver content on a regular basis, you need to look for topics and perspectives for discussion, somehow react to smaller movements and indicators ... However, the reality is that it usually makes sense to increase the timeframe, zoom out and remain patient. If you look at these posts regularly, then you know, I've been talking for about a month now that bitcoin is trading in a range, that confirmation of a return to growth will be a recovery above $ 53 thousand, and it's too early to look for significant signals.

Many now explain this fall by the results.the next Fed meeting, but I do not particularly trust this explanation. Everyone knew what the Fed would say in advance. Rather, the whales were waiting for a convenient opportunity to move the market lower, when most participants are too afraid to buy.

Many of you are probably pretty worried now, too. But you know, you'd better just zoom out and relax: everything will be fine. You just need to be patient.



The weekly chart looks pretty tough, breaking throughlocal range minimums (blue lines). As you can see, as long as the market is trading above the red line, it still means higher lows (bullish structure). The 50MA remains far up and it will be interesting to see where this week closes: this moving average has not become resistance since March 2020. The blue line of the previous downtrend also appears to be broken, although the candle is not closed yet.

The healthy "wick" from the beginning of December is now "full", which happens quite often in such cases.

It is interesting to note (again) that the $ 42K.- this is the most important level for bitcoin for a year now, as if magnetically attracting the price to itself both from above and below. And here we are again with him. This, by the way, is the same level that was broken upward when Tesla announced the purchase of BTC on the company's balance sheets ... and in the opposite direction, when Elon Musk announced that the company would no longer accept payments in BTC.



The price broke through local support and headeddown on increased trading volume. Imperfect picture, of course. As you can clearly see in the chart, the area around $ 42K has been a key support level for Bitcoin for the past year. There is also the potential for a "tweezers" (a formation of two candles with equal lows of "wicks") to form, but this is despite the fact that there is still plenty of time before the close of the day, which means it's too early to judge. At the moment, there are no reversal signals, except perhaps for the fact that the price is hovering above support.


Bullish and bearish divergences from zonesOverbought and oversold conditions were predictably good tools for identifying local reversals. However, it is very difficult to draw consistently accurate conclusions on this basis. As you can see in the summer major retracement example, bullish divergences formed sequentially for weeks before the bottom was finally completed. And from the first of the designated peaks there was a similar story. We recently had a bullish divergence that sent the price to the highs of the range, in the $ 53K area. Now the market can potentially form another, larger one. To confirm, you need to see another reversal in the RSI.



This is the range on the 4-hour chart. The support hasn't even been tested yet. At the upper border of the range, you can see an example of a border test: bearish unsuccessful breakout (SFP, from swing failure pattern), with the candle wick going slightly beyond the borderline in search of liquidity. Let's hope to see something similar in support.


For altcoins, it seems to be implemented"Worst possible" scenario (doesn't sound surprising). The bitcoin dominance index is at extremely low levels and at "support" if you take it seriously on such charts, which do not imply the existence of real orders that form supply and demand.


This looks like a good indicator thatBitcoin's dominance is probably poised for a rebound. It is not bad when the price of BTC rises, because in this case, the "alts" at least more or less retain their dollar value, even going down to BTC. But when Bitcoin's dominance grows amid falling prices, the altcoin markets take a double hit in the form of losses against both the dollar and BTC. This happens and this is also transient, however, in my opinion, it is probably better not to meddle with altcoins with purchases now, at least for more or less short-term traders.

Traditional Markets

SPX (S&P 500)


The stock market "reacted negatively to the Fed's statement," although everything the planet knew exactly what the Fed would say.This is not uncommon, and history has shown that such abrupt dips have usually turned into opportunities for long-term buying of valuable assets. Yes, it could be a top, but it seems like every time someone says so, the market ends up bouncing and heading towards new highs.

However, we understand that the Fed will continue to tightenpolicy and stimulus reduction, which means that the stock market will have to continue to grow with less manipulation and help from the government. This could certainly mean that we will face a longer period of volatility and correction.

This is not a "trading idea", I just wanted to add a little more context to yesterday's Bitcoin selloff and share a couple of thoughts on what that might mean.

For a long time, every correction in history, includingThe Great Depression was a buying opportunity for patient investors with spare funds. This lesson apparently should be applied to bitcoin as well.

Good luck to everyone, take care of yourself and the deposit. See you next week.

BitNews disclaim responsibility for anyinvestment recommendations that may be contained in this article. All the opinions expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading on crypto markets involve the risk of losing the invested funds. Based on the data provided, you make investment decisions in a balanced, responsible manner and at your own risk.

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