A practising trader and founder of the Crypto Mentors project, Crypto Mentors, Nikita Semov, explains the current market situation.
Order-flow Analysis
The buy-side spread is very wide, and its magnitude points to a large buyer in the market.
There is a clear correlation with the vertical volume, which is higher than in the preceding period. This again signals large-capital activity over the past seven days.
We observe a support bar (the demand zone, marked in blue). Last week’s bar is advancing, signaling growing interest, and the result points upward. This week’s bar may test it, after which a price rise could follow.
According to the Japanese candlesticks, a Halberd blade pattern is playing out, with possible scenarios involving either “Three White Soldiers” or “Thinking.” We will obtain information about the pattern at the close of the current week, but in both scenarios a rise is expected.
Reasons for the dump
Many speculate what caused Sunday’s dump: market overextension, an aggressive seller, or manipulation. The latter is most likely.
We begin with the moment of the plunge: seven o’clock Moscow time, Sunday, a holiday. Two-thirds of the main crypto-market drivers are inactive — deep night in America, Europe not yet awake, the Asian market operating at half strength due to the weekend. The ideal moment for manipulation schemes.
But the most interesting aspect lies in the quotes at which the price traded during the impulse. It neatly bypassed certain levels—those that price had previously identified as volume clusters. Prices never pass such clusters easily, as they are created by large market participants.
What was that for?
First, to execute quickly, since any delay in these ranges could provoke a counterreaction.
Secondly, these levels were surely supported by automated bots that could not be triggered because of the first reason.
And the question remains: who could do this? There is only one market participant capable of “bypassing” and “cancelling” trades at certain quotes—the exchange.
Strikingly, such gaps were observed on only one exchange, while trades proceeded smoothly on all others. Our modest estimates suggest that the platform could have earned up to $16.5 million in commissions alone. And if it also acted as counterparty to the latest longs, one shudders to imagine what it could have earned on the shorts.
Price Action and VSA
One might suppose that a powerful selling impulse would push the price lower as volume resolves downward. But in fact this is an ineffective inflow. The point is that the colossal vertical volume could not absorb the earlier leg, which had much smaller volume.
This suggests either the presence of a large buyer, or that the seller has simply dried up, making it impossible to initiate large moves.
In fact, the price is again within the $11,400–$10,680 range, and a major move in the near term seems unlikely.
Likely, after position accumulation by the end of the week, we could see continued upside momentum.
Horizontal Volume Analysis
The price is now trading within the value zone of the previous balance. This is logical, as a large cluster of longs was liquidated, and higher levels require building new positions.
To sustain the bullish trend, it is essential to hold the zone $10,935–$10,980. A breach of the range and a hold above it would indicate an unequivocal victory for the sellers. It is also likely that this zone will be tested for some time.
The most attractive scenario is precisely a test of this zone, as it is appealing to both medium-term and long-term players. Likely, panic moves by the remaining longs and confident shorts by the pessimists will fuel the test.
Conclusions
Overall, nothing has changed to derail the continuation of the bullish trend. Nevertheless, one may expect a modest correction and/or rotation in the balance to facilitate the building of new positions.
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