Bitcoin Morning Market Report January 19 ...

Bitcoin Morning Market Report January 19th

Jan 19, 2022

To subscribe to this daily newsletter (2 reports daily during the week, and one report on Sunday), follow the link below to get started with as little as $10/month!

https://www.buymeacoffee.com/bitcoincharts

LIMITED TIME SPECIAL OFFER: To those that missed the lifetime membership offer, there are still 4 left! $108 (same price as an annual membership) for lifetime access to our market reports. DM me on Twitter for more info!

You will find the content below in this order:
1. Definitions
2. The Good
3. The Bad
4. Key Levels
5. Final Thoughts

DEFINITIONS

Liquidity zones are high volume levels that offer support and resistance

Hidden bearish divergence: creating a lower high in price, with a higher high on the oscillators. This signals a possible trend continuation down.

Bearish divergence: higher high in price, lower high on the oscillators. This signals a possible trend reversal down.

Hidden bullish divergence: creating a higher low in price, with a lower low on the oscillators. This signals a possible trend continuation up.

Bullish divergence: creating a lower low in price, with a higher low on the oscillators. This signals a possible trend reversal up.

SR flip: turning old resistance into support, and vice-versa.

Fractal: recurring geometric pattern.

Price action (PA): the movement of an asset's price over time.

THE GOOD

4H Timeframe

Key Liquidity Zone (LQZ)

Zone 2: There is a LQZ at 41.7k-42k which Bitcoin is currently attempting to hold as support.

Implications: Ideally, this serves as support moving forward. However, if this LQZ is lost, there's an increased likelihood that we see continued downside PA.

Divergences

Bullish Divergence 

Bitcoin has a lower low in price, with a higher low in the RSI/MACD. This is a bullish divergence, which signals a possible trend reversal up.

Invalidation: Lower low in price and in the RSI/MACD.

1H Timeframe

EMA Ribbon

Bitcoin is attempting to hold the EMA ribbon as support in this timeframe.

Implication: Ideally, this holds as support to continue up.

What is an EMA ribbon? A 'ribbon' of EMAs that together indicate bearish and bullish momentum in the market. When an asset is trading is above the ribbon, it's considered bullish. Vice-versa.

Divergences

Bullish Divergence

Bitcoin has a lower low in price, with a higher low in the RSI. This is a bullish divergence, which signals a possible trend reversal up.

Invalidation: Lower low in price and in the RSI.

THE BAD

4H Timeframe

Key Liquidity Zone (LQZ)

Zone 1: Bitcoin continues to trade below the LQZ sitting at 46.8k-47.1k. 

Zone 3: The LQZ at 42.9k-43.1k has been lost as support.

Implications: We may see this serve as resistance moving forward.

EMA Ribbon

Bitcoin has lost the EMA ribbon as support in this timeframe.

Implication: This may serve as resistance moving forward.

What is an EMA ribbon? A 'ribbon' of EMAs that together indicate bearish and bullish momentum in the market. When an asset is trading is above the ribbon, it's considered bullish. Vice-versa.

Simple Moving Averages (SMA): 20, 50 and 200

Bitcoin continues to trade below the 200 SMA and has fallen back below the 20/50 SMAs.

Implication: These may serve as resistance moving forward.

1H Timeframe

Divergences

Exaggerated Hidden Bearish Divergence

Bitcoin has a lower high in price, with a similar high in the RSI. This is an exaggerated hidden bearish divergence, which signals a possible trend continuation down.

Note: Exaggerated divergences are the weaker type of divergence.

Invalidation: Higher high in price and in the RSI.

KEY LEVELS

4H Timeframe

  1. 39970

  2. 40755

  3. 41645

  4. 42845

  5. 44215

  6. 45310

  7. 46745

  8. 48145

  9. 48845

  10. 49755

  11. 50380

  12. 51000

  13. 51885

  14. 52190

  15. 52829

  16. 53235

  17. 53865

  18. 54885

  19. 55473

  20. Fibonacci levels

1-hour Timeframe

  1. 39650

  2. 40610

  3. 41000

  4. 41200

  5. 42000

  6. 42430

  7. 42885

  8. 43100

  9. 43580

  10. 43815

  11. 44080

  12. 44500

  13. 45455

  14. 45900

  15. 46130

  16. 46585

  17. 47320

  18. 47920

  19. 48315

  20. 49190

  21. Fibonacci levels

FINAL THOUGHTS

RECAP FROM LAST NIGHT

Bitcoin continues to trade within the Bearish Territory.

As mentioned this morning, there was a possibility for seeing relief from our bullish divergences in confluence with the Golden Pocket, and we are seeing exactly that. 

What's nice to see as well is that on the lower timeframes, we are seeing a market structure change. We have printed our first higher high (indicated by the green curve) since January 13th. Ideally, for the bullish scenario, this continues. And to top it off, yes, we do have a potential Falling Wedge in play. It feels like forever since we've had a decent pattern to observe. As a reminder, patterns are technically only valid when we see a breakout that confirm the pattern's bias. 

As great as it is that we're seeing this relief, we still need to be cautious and aware of potential points of resistance as we are in a sustained downtrend (ie. a Bear Market). Currently, in confluence with the 1H hidden bearish divergence, we have the white Golden Pocket serving as resistance. If we continue up from here, I've also outlined the two other main Golden Pockets we should be aware of. These are likely to serve as resistance as well. Depending how the data looks at those levels, they may be points at which we'll find rejection and a reversal. We'll cross that bridge if/when we get there.

The other levels above and below remain the same.

All in all, it's great to see these divergences provide some relief for the market. However, as always, we need to stay vigilant and aware of the levels above as they are likely to serve as resistance. If Bitcoin can maintain this bullish momentum, it becomes more likely that we see a bullish breakout from the Falling Wedge.

THIS MORNING

Bitcoin continues to trade within the Bearish Territory.

Bitcoin has formed another 1H and 4H bullish divergence. In confluence, we have the Golden Pocket again of this entire move up after bottoming at 39.6k, with a Swing Failure Pattern (SFP) of the low. As. a reminder, in short, an SFP of the low is when we see price temporarily fall below the previous low but is unable to sustain price action below it ultimately resulting in an aggressive move to the upside.

Currently, we're finding resistance at the same Golden Pocket we did yesterday, again with a hidden bearish divergence.

Given that Bitcoin is consistently creating new bullish divergences, leads me to believe that there's still an opportunity here that the bulls can take advantage of. As long as Bitcoin can maintain price action above the 41.1k low of today, there's still hope. Ideally, we see a new higher low come in at the yellow Golden Pocket, or in the region of the green curve I've indicated above.

And if we do create a higher low in an attempt to continue up, please refer to the 1H Key Levels for all immediate relevant Golden Pockets that will likely serve as resistance.

However, if the bulls aren't able to sustain momentum, this Bullish Gartley is still valid.

And these lower targets are as well.

All in all, on a short to medium term level, Bitcoin is starting to form bullish divergences, indicating some strength from the bulls. If the bulls can make something out of this, I would be looking towards our Golden Pockets as potential resistance points (see 1H Key Levels).

Thank you for your continued support and I hope you have a great rest of your week!

Keep an eye out for tonight's daily market report in about 8 hours.

Stay safe. Trade safe.

Cheers!

To subscribe to this daily newsletter (2 reports daily during the week, and 1 report on Sunday), follow the link below to get started with as little as $10/month!

https://www.buymeacoffee.com/bitcoincharts

LIMITED TIME SPECIAL OFFER: To those that missed the lifetime membership offer, there are still 4 left:

$108 (same price as an annual membership) for lifetime access to the market reports. DM me on Twitter for more info!

Enjoy this post?

Buy Bitcoin Charts a beer

More from Bitcoin Charts