A practising trader and founder of the Crypto Mentors project, Nikita Semov, explains the current market situation.
Global picture (weekly timeframe)
We assess potential scenarios in the context of price action. The past week, as expected, ended in a bullish engulfing pattern with the weaker seller absorbed. The candle’s size corresponds to the average magnitude of the previous weeks (26.35% price move).
The bar’s spread is fairly wide, indicating an aggressive bullish sentiment. The reaccumulation on bar 2 is similar to the effort on bar 1 — this points to buyers’ dominance. Volume is below average, but it is sufficient to push the price higher in the absence of resistance from the bears.
The overall structure resembles a reaccumulation for a further move higher. Therefore, the bullish scenario remains the priority.
Although the new week has just begun, a JOC has already formed — an upside breakout of a local range. From such formations, we expect the asset to continue rising.
A cluster chart reveals that the main volumes are distributed higher each time. There is a VA shift, along with rising interest in the trading range. This suggests demand dominance.
Opening shorts against such a market is akin to suicide. The maximum volume of the previous week was tested. You can notice a volume reaction (a pump). Thus, below this level, provided the bullish trend remains, they should not move lower.
A very high volume flashed around the $39 280 level, and the chances of repositioning it are also very low. According to the delta, buyers managed to push the price effectively. Sellers, by contrast, showed inefficiency.
Correction
The entire move can be equated to the JOC pattern — an impulse breakout with stop-loss wipes. Thus, the most priority scenario is waiting for a pullback to the level of $43,700. From there one can seek an entry point with the aims of surpassing local highs.
For those not in a position, it makes sense to pick longs at the end of the pullback. Looking for shorts is not recommended — there are no volume-driven formations and other prerequisites indicating bearish dominance.
Breakout — correction
The scenario is less prioritized and less advantageous for entry, since the asset is locally overbought. In terms of expected value, there will be a setup on the correction. Any breakout variants are extremely risky. Those willing to tolerate large stops may try to play a breakout variant in the long term, which implies waiting for take-profit orders to trigger over several weeks and even months.
You can wait for a breakout of the last extreme, after which, according to a similar scheme, you can look for entry points through corrective waves.
Anatomy of the impulse
There are several types of impulse, but all of them usually include three phases:
- A — pre-accumulation, fueling from stops and liquidations.
- B — the impulse itself. Here it is important to mark zones where the largest volumes occurred — they will subsequently become reference points for the correction.
- C — appearance of volumes in the counter-trend, creating balance. This phase, in 8 of 10 cases, precedes a correction.
Bitcoin looks maximally bullish. This week, it is more likely that we will see the price above $50,000. To enter the market, the best option is to wait for a short-term correction.
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