According to analyst Akash Girimath, Bitcoin is doing its best to break out of its macro bearish regime and the 2023 rally is proof of that. Technical analyst Ross J Burland said: ‘How much can golden bulls milk in ‘short squeeze’?’ seeks an answer.
Bitcoin is getting a fresh start
The three-day chart for BTC is preferred as it clearly combines both short-term and long-term views. The red ‘one’ sell signal of the Momentum Reversal Indicator (MRI) on Jan 28 appears to indicate a local top. Since that time cryptocoin.comAs you follow, BTC has lost 9.69%. The $20,312 level is the midpoint of the 48% Bitcoin price increase experienced between December 30, 2022 and January 31, 2023. This support level is crucial in determining what will happen to BTC.
Additionally, Bitcoin is approaching a bullish breakout from $20,052 to $21,470 formed on November 3, 2022. This supply zone is then crossed with a sudden and sudden movement, as during the strong rally in January. If the above conditions are met, retesting this nascent bullish breaker often results in an increase in buying pressure. Currently, Bitcoin has not yet labeled this level. But if so, it could be seen that BTC jumped to $22,600 when retested.
Bitcoin price needs to break the $20,312 level into a resistance barrier for both the short-term and long-term bearish outlook to continue. Such a move invalidates the bullish breaker and confirms the existence of the sellers. In such a case, the leading crypto could retest the $18,210 support level.
By on-chain metrics, the worst is over
IntoTheBlock’s Global Money In/Exit shows that the immediate support level for Bitcoin price and buyers on the sidelines are between the $16,630 and $21,066 zone. Here, roughly 6 million addresses bought 3 million BTC at an average price of $18,627. So, if Bitcoin price experiences an overwhelming increase in selling pressure, it may find stable ground at the aforementioned level.
There were two instances last week where Whale Transactions worth $100,000 or more went over 1,500. This increase deviated 55% above the 30-day average of 966, which coincided with the exhaustion, sell signals and bearish trend seen in Bitcoin price.
A spike in whale trading after an uptrend is often considered a proxy for local top formation. Because these investors can move their assets to make a profit. Thus, this increase indicates that the selling activity of high-net-worth individuals is causing the recent shift in momentum to shift in favor of the bears.
Because of this profit-taking event, investors who bought BTC last month and were ‘profitable’ have now reached breakeven levels, as seen in the Market Value to Realized Value (MVRV) model. This on-chain metric was read 22% on Jan 20, when BTC formed a local top of $23,770. Such data was last seen in February 2021, when BTC started its bull run, showing that 23% of addresses that bought BTC made huge profits last month.
Typically, a fluctuation like this usually indicates a local top formation. Because these investors can make a profit and trigger a sale. Currently, however, the 30-day MVRV is hovering at -2.0%, revealing that investors who bought BTC last month are just below the breakeven point.
Gold price technical preliminary technical analysis
Gold fell on Friday and fell for a second day as dollar and US Treasury bond yields soared. It also partially met the forecasts for the week made on February 5th in last week’s pre-opening market analysis.
Above is February 5 gold price daily chart analysis and below is Friday’s gold price close update.
However, while the gold price fell, it did not close lower on a spot basis, and even closed the day higher. It can also be noted that a 38.2% Fibonacci retracement on the upside or the downside target of $1,825 has not been met.
Interestingly, the trajectory was in place and this is typical of spiral consolidative market conditions. This can be reduced to the market sentiment phase surrounding the Federal Reserve’s monetary policy path, due to conflicting themes such as Fed speakers and ambivalent steering compared to the results of economic data.
Gold price on the back
One thing we do know, however, is that the technical outlook for gold price remains bearish, with the metal’s price pegging below the $1,900 level a week ago, despite being on the reverse side of the daily trend.
Now let’s take a deeper look at the price action and see if we can identify a directional bias for the opening. Starting from last week’s open, we had a three-day high through Wednesday and had a fantastic sell-off from the day’s high on Thursday after three sessions of gains from an hourly average of 50%:
Typically, after the first bearish daily close, the continuation of the consecutive bearish close would be expected, but we didn’t get it. That’s why there were bears trying to short the market by chasing various structure breaks such as:
In the chart above, we can see a breakout in the structure that occurred on Friday, the BoS caused traders to buy and sell. BoTs (short positions) and both the London and New York sessions sold more than the day’s highs. Additionally, the continuation of the previous bearish hourly impulse reached the -272% Fibonacci extension of the correction range as follows.
As a result, this could be a failed breakout scenario ahead of CPI data scheduled for Tuesday, February 14th, followed by US Retail Sales the next day.
Most breakouts fail for gold
If this is a failed breakout, we can thesis that we are preparing for the opening, a false breakout return from the recent lows, now that we know most breakouts have failed and we are in a new 100 pips box. Here’s the weekly view to target liquidity around $1,870 with a short squeeze.
That doesn’t mean we won’t see a move into longs and test trendline support before moving up to test Monday/Tuesday’s stops around 1,860 and the bottom of the new 100 pips box.
So, we can see things a little more positively this week. However, we have theoretically made such a fresh daily low that the Fibo is invalid if we are trying to plot the previous 38.2% above the bearish trend of the previous daily chart on consecutive daily closes. Instead we can jump to the weekly chart and plot the Fibonacci as follows:
If we stick to the main bearish thesis that retracted on January 29 when evaluating the outlook and initial balance for the new month of February, we’re still looking at a test of around $1,890 before the next downside shift:
As shown in the link below and above, we are in the upper third of the 2023 range and on the reverse side of the first trendline that broke and served as the counter trendline. A break of $1,925 was expected to open the risk of testing $1,867 as the upper part of the lower third of the range protecting $1,896 followed by the $1,825 1000 pips box:
The chart above is an analysis drawn at the end of January. Below is where we are up-to-date on the week that started open on February 12.
So far, so good.
Next week is important for gold prices
For the week ahead, US data could be a pivotal moment. A stronger-than-expected CPI data in January would likely reinforce the recent strong economic data theme, pushing market pricing for upcoming rate hikes even higher.
This is expected to limit further progress in the gold price and potentially be the fuel the bears need to see the price go further down within the 1,000 pips box. Finally, not necessarily this week as it depends on how much the bulls can squeeze the shorts, the bears will need to break below the $1,850 support for low hanging fruit on their way to the $1,825 target.
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