Crypto Market Update July 3, 2024

July 3, 2024
@Justin Wise
Lead Technical Analyst, Co-Founder

Bitcoin Daily Chart

Yesterday's Daily Candle closed as a weak Bearish Candle, confirming the Evening Star Pattern I identified yesterday. Today's follow through from the sellers has been quite strong, evidenced by today's open large bearish candle.

As we can see from the chart, the consolidation range from last week into last weekend created a High-Volume Node, that Bitcoin attempted, unsuccessfully, to break out from. Today's price action has caused us to wick down into the Low-Volume Node zone directly below this consolidation level, where a large cluster of Long Liquidations and Large Limit Bids were centered. You can see that price did not dip down into the next High-Volume Node, showing that, as it stands, buyers are not willing to give up the current High-Volume Node range.

We are still holding 200 DEMA support, as well as holding our Higher Low within this range. The 21 DEMA acted as our current level of resistance, so that is the dynamic level we need to break to begin a new price discovery phase.

Overall, none of this is very exciting or concerning to me, as I favor the long-term view. My base case is that this is a buying opportunity for the short to medium-term.

We should likely bounce from this range, and either break through the 21 EMA to the upside or reject again, either would be fine. The longer we consolidate, the greater the resulting breakout from this range will be.

We could see, following a recovery bounce, price find acceptance in the tight High-Volume Node at $59,000, and even wick down to re-test 200 EMA support. As long as we're closing Daily Candles above the 200 DEMA, buyers should feel pretty comfy and just hold conviction in their positions.

Bitcoin Technical Chart

What we can glean from the Technical Chart today is that the selling volume has not been very impressive. Although today's candle was quite large, there was not actually a lot of selling volume relative to buying pressure. Which means the reason price was able to move so far, is due to the thickness (or depth) of the Order Book. Buyers simply pushed their limit bids down lower, to capture lower price. As the selling bounced back from the Low-Volume Node highlighted earlier, this lets me know that buyers were simply smart today, capturing a deal on Bitcoin's price.

We have not yet reclaimed a Daily Bullish Trend, as evidenced by the Gann Swing Indicator. As I've continually stated, we must close above $64,000 first. More conservative traders can simply sit in cash, on the sidelines, and wait for that momentum signal.

Bitcoin Liquidation Heatmap

As I predicted in yesterday's report, Bitcoin Longs became the target of liquidations today. As we can see, over four violent drives down over the last 24 hours a large amount of Long Liquidations were cleared off the books.

There is now a final strong cluster of Liquidations at $59,526 - however it seems that shorts will be the target for liquidations for the rest of the evening and into tomorrow. I would expect price to continue it's recovery bounce from this level and push up close to $62,000. If we successfully close above that level, early momentum longs could be taken, however a rejection would be a good short-term opportunity to see price re-visit $60,000.

Bitcoin Footprint Chart

Several things are interesting about today's Footprint Chart. First, for the first time in awhile, we filled significant Large Limit Bids on this last drive to the downside, when the current low of $59,500 was established. This is significant, as often after these Large Limit Orders are filled, price then reverses in the other direction. This same dynamic has occurred over and over in Bitcoin's price action, go backtest it.

Secondly, we can see the declining Open Interest as price approached the lows, not only from Longs being liquidated but also shorts taking money off the table. The selling volume has been particularly weak, as we can see very clearly here, which as I said before, means the orderbook is responsible for the volatility of price's movement today.

Aggressive Ask Imbalances sit at $61,190 - $61,400 - and $61,700. Those would be my short-term targets for any reversal longs taken from this range. As I said, I would like to see a clear rejection and failure to reclaim $62,000 before I re-enter shorts. I did short the majority of this movement down, but I am now closed out of those positions.