Bitcoin (BTC) is trading at $7,106 representing an impressive 14.7% gain in the last 24 hours and 6.8% for today. Other global markets are also up off the back of President Trump’s comments around the likelihood that crude oil production will be cut back, which is one of the triggers which caused Bitcoin to slide from $9K to $8K in early March.
Cryptocurrency market 24-hour view. Source: Coin360
1-month Bitcoin price chart
BTCUSD 1-month chart. Source: Tradingview
Bitcoin closed the month of March with a bearish candle close below the previous support at the 20-month moving average, which represented the first close below $6,500 in 11 months. Volume during March saw Bitcoin print the second-highest monthly volume candle of all time at Coinbase, with only December 2017 taking the prize for the highest volume.
Overall volume has printed increasing selling climatic pressure over the last 18 months, but there has been a large rejection seen above the VPVR point of control that shows the price at which most volume has been traded (yellow horizontal line).
The next highest volume node is where the bulls and bears are now battling it out. In the past, Bitcoin has never spent a long period of time between the price of $4,000 and $6,500. So despite the bearish close, the total rejection of trading below $4,000 is encouraging for the bulls who neutralized the memorable deleveraging event very quickly.
The Relative Strength Index is trending at 49, which is neutral and fairly representative of where the price currently is.
1-week Bitcoin chart
BTCUSD 1-week chart. Source: Tradingview
The weekly Bitcoin chart shows that the price currently trading up against previous support, now turned resistance at around $6,800. There is also a diagonal resistance that forms the top of a channel from which Bitcoin broke out earlier this year but ultimately dates back to July 2019.
The 200-week moving average defines support with very little price action occurring below it for any amount of time, indicating demand and lack of supply. The 20-week and 100-week averages are likely to be a formidable resistance point for Bitcoin as they have historically been very important support and resistance areas that dictate the bullish or bearish nature of the market.
The year to date Volume Weighted Average Price (VWAP), which is the average price for the year, weighted for volume lies at $7,100 (as is the 100 WMA). This implies that there will be an inflection point which normally acts as a magnet for the price where most business has taken place.
Overall the 200 (at $ 5,588) and 100 (at $ 7,095) week moving averages are dictating local support and resistance, the latter of which is currently under assault by the bulls.
Bullish buying volume has persisted for the last three weeks but is diminishing as the price is rising. This is generally considered to be leaning bearish in an uptrend where the bulls are losing momentum, although it should be noted that the recent volume has been unusually high.
The Chaikin Money Flow oscillator, which looks at the amount of Money Flow Volume over the last 20 weeks, shows that there is a bullish divergence within the volume, which is indicative of relative buying pressure.
BTCUSD 4-hour chart. Source: Tradingview
The 4-hour Bitcoin price chart shows a series of higher lows for BTC/USD and helps to illustrate the demand at the 200-week moving average and below, both of which are being front-run. There is also a failed head and shoulders top, which was another indication that the bulls are in control of the narrowing price range.
The CMF has turned positive, which is a good short term signal for the bulls. But it is overall relatively neutral, which is indicative of the volume decline. The Stoch RSI is indicating that Bitcoin is overbought on lower time frames.
CME & futures data
CME Futures 1-week chart. Source: Tradingview
The CME produces a Commitment of Traders report issued on Friday, which aggregates net trading positions of differently sized traders to identify the overall directional position of each category.
The large-sized traders or institutional traders are illustrated by the red line on the chart above and it’s easy to see that they are nearly always short Bitcoin, but doubled down on their short positions in 2020 between $8,200 and $10,700. The chart shows that they only closed these out in the latter fall from $8,000 to $4,000.
The reason this is important is that we know that a lot of the CME buying pressure was from the closure of the large-sized short positions. The retail and professional traders contributed to the selloff as should be expected, while the institutions profited by closing short positions into the supply generated from the decline.
We can, therefore, assume that institutions will be interested in shorting the same range as previously, from $8,200 upwards. This is also in confluence with the weekly moving averages that are likely to cause resistance and also the yearly pivot that lies at this price.
As such, the CME data may be useful to monitor the behavior of large-sized traders if Bitcoin can reach out for $8,000.
Also shown on the chart is the Bitmex funding rate, which has historically had an inverse relationship with price direction when either particularly high or negative. This is showing that it has now flipped marginally positive again, which indicates a bullish shift in the market. In other words, sentiment had turned (at resistance!), which may be an opportunity for the bears.
Bitcoin is critically showing a clear lack of selling interest below the 200-week moving average and buyers appear to be stepping in at these levels, which is clearly bullish.
Any break to the upside is likely to be ultimately resisted around the $8K level due to the confluence of technical resistance and known institutional short-selling interest.
The first real sign of bullishness would be to start to reclaim each of the weekly moving averages and start turning them into support, with the $7,100 level at the 100-week moving average being the first objective. Should there be another downturn, the 200-week moving average will be the first line of defense.
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