“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.”
- George Soros
Announcements
New Forbes piece — Bitcoin’s Flash Crash Offers a Lesson for New Retail Investors —looks at the most recent FOMO sucking new retail demand into digital assets.
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Momentum Indicator
The momentum indicator (MI) is currently 0.44, a strong recovery from its bottom at 0.05. Despite the sharpe increase, the metric is still far from overbought levels, thus signaling further upside as likely.
Risk Indicators
The un-smoothed risk indicator (RI) offers a similar perspective as MI, currently sitting at 0.44. Similarly, the slope of ascent is steep, which is likely to pullback periodically. But, the overall trend remains upward (seen more clearly with the moving average), coupled with the value still being far from overbought levels.
As mentioned above, the smoothed risk indicator (moving average) is showing a clear uptrend and currently sits around 0.30.
Both risk indicators are signaling further upside as likely.
Technical Analysis
At the time of writing, bitcoin is experiencing near-term price weakness, trading around $11,500.
The 4-hour chart shows the bulls slightly losing control to the bears, but it may not last long as the RSI has been pushed into deeply oversold territory. If price can stay within the Kumo Cloud and/or break above, coupled with a recovery in VFI (staying above 0) and RSI trending back upward, price is likely to catch a “bounce” in the near-term.
The longer term charts offer a bullish bias, but mixed signals are emerging. On the 1-day chart, price is still strongly above the Kumo Cloud — including strong uptrends in VFI and RSI.
However, price appears to be making a lower high from its Summer 2019 peak. If this range holds, price is likely to fall farther back towards $10,500. Furthermore, VFI and RSI are beginning to show initial signs of a bearish divergence.
Finally, on the weekly chart, price is fighting to stay above the Kumo Cloud, while looking to close the week above the critical $11,600 level and turn it into support. If price can manage this task, it should only be a matter of time before it breaks above $12,000 with volume.
Summary
The Momentum and Risk Indicators continue to suggest the bullish environment will continue for bitcoin. Although, periodic bouts of price weakness and subsequent accumulation cannot be ruled.
Technical analysis is still skewed slightly to the bulls, but showing some initial bearish divergences, which must be monitored over the coming days. If price can stay above key support levels amidst current weakness, a break above $12,000 seems likely. If not, $10,500 is the support to level to watch for the bears.
As always, we will continue to monitor our analytics and provide real-time updates in the Telegram channel when they become available.
Onward and upward,
Chris
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