Yesterday's Daily Candle closed as a Harami, a candlestick pattern where a smaller candle body closes completely within the body of the previous candle. That "child candle" was also the candle that generated our Time Transformation Buy Signals. Harami candles, like Hammers, are Bullish Reversal signs that appear at the end of downtrends.
In today's Group Mentoring Session, we'll be diving deep into On-Chain Analysis, looking at the Cost Basis of Long-Term Holders vs. Short-Term Holders and how this heuristic allows us to gauge the "incentive" of each cohort to sell. We'll also look at past market cycles, compare where we're at to where we've been, and look at what the probabilities and risks are of a deeper correction or a push into the Euphoria Phase of the market, where prices appreciate rapidly (we're so close!).
Bitcoin Daily Chart Analysis
So far, today's Daily Candle structure is almost an Inside Bar, similar to a Harami but where the entire body is within the range of the previous parent candle. Not truly an Inside Bar today, as today's high is $60 higher than yesterday's High, however I see a period of consolidation which indicates a breakout in either direction.
Holding long, as that is the most likely mean reversion direction and what my strategies are suggesting. I haven't swung into altcoins yet, due to the underlying risk of continued correction.
Once more steam is generated from the buyers in the form of follow-through, and a bullish continuation following the current consolidation, I will take on more risk in high-value altcoins to boost this series of long trades.
I'm sharing a Screenshot of my ByBit Trading Account, where you can see how I've positioned into this trade. Essentially, buying on dips on the 1H time frame, splitting my position sizing up. I use the 1H Volume Profile and Footprint Chart to identify where strong volume and aggressive buying has come into the markets, and cross reference that with the Liquidation Heatmap to identify likely areas where price will go to
a) Liquidate Late Longers
b) Test Aggressive Buying Imbalance
c) Re-visit Liquidity (High-Volume Nodes)
I place my Limit Entries slightly above these levels (to improve my chances of getting filled) and I generally set 2-3 descending orders in increasing magnitude (a combination of DCA with a splash of Martingale). This allows me to slowly increase my position size to a full position size without taking all of the risk on upfront.
I don't always Position Size this way, but typically when we're in situations like this, in Reversal/Mean Reversion situations.
Bitcoin 1H Chart Analysis
Bitcoin has reached the 21/55 EMA Cluster. Natural for price to pause here and consolidate before making a more pronounced movement. This is exactly what happened two days ago, right before we broke down to our current low of $58k.
There is a High-Volume Node Support Cluster here, stretching from $61,036 - $61,502. It would be preferable (instill more confidence) should this level of support hold. Volatility is compressing, and now is a good time to position for any short-term intraday trades.
A bullish rally is not invalidated if we trade below this level, the second High-Volume Node Support Cluster comes in at $59,916 - $60,440. Those are the two zones the Bulls need to defend convincingly to incentivize more buyers to step into the market, fueling the rally.
Pro-Tip: These High-Volume Node Clusters are where I stagger my Limit Bids to size up my position.\USDT Dominance Analysis
USDT Dominance Analysis
Following USDT Dominance's rally to 5.3% of Total Market Cap, inversely to Bitcoin we have fallen back down to 5.10% and are currently consolidating identical to Bitcoin.
Order Book Analysis
Looking at Bitfinex Order Book support, I see significant bids around $61,300, which has a strong chance to act as support should Bitcoin dip down to liquidate late longers (low-medium probability). On the same hand, I see significant Asks coming in at $61,700 which may serve as resistance.
Large Limit Order Analysis
Turning to Large Limit Orders, I have to point out the signifigance of all of the Large Limit Orders that were filled on the market's plunge down to $58k. An obscene amount of Large Limit Longs were filled, showing the conviction and buying power of the short-term holder cohort.
Currently, Large Limits spread down to $60k, which ideally we should not see filled.
Bitcoin Footprint Chart
Turning finally to the Footprint Chart, we don't see any Aggressive Bid Imbalances below us to fill, except at $60.9k, and a sea of Aggressive Ask Imbalances above us to test ranging in the short-term to $64k. I believe that those prices will be tested soon.
Conclusion
In conclusion, while Buyers have stepped in and shown aggressive buying, and we have dipped into a strong area of support, we are not out of the woods yet. As today's Group Mentoring session will display, there is still a big risk of a continued correction.
For that reason, I recommend remaining in cash/stablecoins with the vast majority of your account/portfolio. Take appropriate risk with your trades, as this is the season for capital preservation and patience.
