A practicing trader and founder of the Crypto Mentors project, Nikita Semov explains the current market situation.
Our previous expectations regarding the downward dynamics of the market did not hold. This is reflected in the market’s lack of a proper reaction to key price levels. A fresh, comprehensive analysis is required across all points.
A number of factors have emerged indicating a greater likelihood of price moves toward the long side rather than the short side.
Firstly, the seller’s response from the supply zone leaves something to be desired, as historically (in the left part of the chart) there was an impulsive BUI with high volume and a large spread. However, at present the attack angle from the red-marked zone is weakening.
This signal indicates a lack of sufficient interest and strength among bears to push the market lower. SOT and BUNP serve as unproductive signals in VSA and do not drive the price downward with adequate intensity.
Therefore, 2:0 in favour of the buyer.
Analysis of horizontal volumes and delta
In the context of the daily timeframe we are still below the resistance level of $10,940-$11,000. However, there are no significant defensive reactions, as seen on the hourly chart.
Global control of the delta belongs to buyers; there are few signs of a seller.
In the medium term we saw decent protection upon initial approach to the zone, but now nothing of the sort is visible.
The price is clamped between $10 860 and $11 000, which could trigger a balance. In such a scenario this would resemble a squeezing pattern with a high probability of a subsequent breakout to the upside. However, we can discuss this only if there is a reaction (or lack thereof) to these two levels.
Locally, in the moment one can observe an emergence of buying inefficiency, but now we need to see the reaction.
To resume the short scenario, a breach of $10,860 and $10,775 is required — which would coincide with a move out of the balancing range.
It is also worth noting the support for the upside in Open Interest (OI) relative to short-side efforts. Initially, during the entire decline from $11,060 to $10,740, OI showed a decrease in positions, which was the first bell for changing our priority.
Currently, open interest does not indicate accumulating positions, but shows stability.
Conclusions
On the one hand, there is a formidable volume resistance overhead, and on the other a lack of clear protection, making it difficult to impose our alternating extremes. This suggests weakness in the buying waves and a host of other small factors noted above.
Logically, one should wait for a close beyond either the $11,000 or the $10,775 level, after which to seek entry opportunities.
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