A practicing trader and founder of the Crypto Mentors project, Crypto Mentors Nikita Semov, discusses the current market situation.
Price Action and VSA
An excellent wave of buying has been observed, which was forecast in previous analysis; the market is behaving technically, but it is important not to make hasty decisions and to understand the principles of market behavior when such setups form.
The breakout wave has a fairly steep attack angle — demand is significantly higher, and bulls can easily push the price higher. Remember that a trend is not a parabolic, monotonic rise, but a sequence of highs and lows. Consequently, after an impulsive, non-corrective rise we expect a pullback. It should be accompanied by weak selling, a lack of volumes, and no clearly expressed selling delta (dying towards the level of $20,000). The continuation of parabolic growth after an impulse of 24% is not the most probable expectation.
More locally we have Wyckoff’s 2/3 schematic. This is an example of classic market distribution — accumulation of a position, after which a decline follows. At the bottom, EQL has formed, which comprises a liquidity zone attracting price.
This idea is confirmed by a BUN (Bar of Untruth on the 4-hour chart). The buyer extends his waves much longer than the seller, indicating a lack of interest in buying at these price levels. We await a pullback to the $20,000 zone and the resumption of buying from that zone.
Analysis of Horizontal Volumes and Delta
First of all, one should pay attention to the distribution of volumes along the impulse. At present, most trading occurred at the $22,750 level [1]. Therefore, a bounce can be expected already. However, given that we are in balance, rotations around this level with volumes may still occur.
In the event of a correction, close attention should be paid to zones $21,800 and $20,690, as that is where the pushing volumes [2] were observed. Nevertheless, we are considering a deeper correction to $20,690, as the December VWAP will align with this value. And given the very strong deviation, a return to the mean would be a classic pattern for a “mean reversion” (pull-back).
From a delta perspective, pay attention to holding the lower bounds of the current balance, as expressed by the number of wicks, and confirmed by weak selling in this area. We pay particular attention to the $22,500 level. If breached, prepare for a decisive correction to the aforementioned levels [1].
Analyzing the on-balance delta, we see a fading intensity, indicating a temporary halt of the impulse. Control has almost entirely shifted to sellers across the board, increasing the probability of a corrective move [2].
A positive aspect of the delta is the absence of divergences in cumulative values, as well as overall adequate support during the impulse.
All these factors indicate that, despite partial take-profits, traders are not rushing to close all their positions. There are no signs of strong short pressure either. Thus, at most we should expect a correction, after which we anticipate a resumption of the uptrend.
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