BTC Daily - Heikin Ashi, MA, L&S/Ratios
Overall Summary:
Overall the last 7 days were bearish and I am bearish for the next 7 days.
Bitcoin is trading in the $3600 to $4200 range during the last week, 81.5% down from the ATHs, with a market cap of $63 billion. The chart indicates a continuation of the current downtrend. The price is closest to the 50 MA with a trend towards the 50 MA. The volume has decreased over the last week, which is supporting the current price action. The Longs have decreased while the Shorts have has decreased during the last week. The L/S Ratio has decreased in convergence with the recent price action, a bearish signal. Finally the ATR has increased indicating an increase of market volatility.
Detailed Summary:
This chart uses daily Heikin Ashi Candlesticks with a custom trend bar indicator, 4 MAs (20, 50, 100 & 200), L&S, L/S Ratio & ATR
Heikin Ashi candlesticks are great for trend and swing trading. Heikin Ashi means ‘average’ in Japanese because these candlesticks ‘average out’ price action vs traditional candlesticks that are based on OHLC (Open High Low Close). By averaging out price action this candlestick style reduces ‘noise’ and generates a much smoother chart pattern. This is helpful for trend traders as it is easier to identify the key trend in the market and to ignore smaller price volatility.
During the last week the price has ranged by $500, opening at $3800 and closing at $3600. The price has decreased over the period which is a continuation of the long term price trend.
Moving Average are also used on this chart to help identify major areas of S&R and general price trend action. I prefer to use simple Moving Averages on the daily time frame. The 200 MA is red, the 100 MA is orange, the 50 MA is yellow and the 20 MA is green. The choice of colours helps me to read the chart and see if price action is bullish or bearish. For example, if the red is on top and the green is on the bottom, it is clearly bullish. It is also important to note that the longer the Moving Average period, the stronger the support and resistance.
During the last week the price is closest to the 50 Moving Average and during this period it has trended around the 50 Moving Average. The 50 Moving Average is currently acting as resistance while the 20 Moving Average is acting as support. The key Support area is $3300 and key Resistance areas is $4200. I forecast in the next week that price will test the next support area.
Volume is a key indicator that I use to understand past, current and possibly future price action. Unfortunately a majority of the exchange volume is fake ‘wash’ trading so it is important to rely on data from reliable exchanges like Binance and BitFinex. Volume that supports price recent action helps strengthen my belief in a specific trend.
During this period volume has decreased in convergence with the recent price action. On a longer term time frame, the volume is in convergence with the long term trends. I forecast in the next week that the volume will decrease and this will support a decrease of price.
The Longs & Shorts data is from BitFinex, one of only two professional trade contracts exchanges with sufficient volume in the space, the other is BitMex. The number of contracts and the difference between the total longs vs short contracts is a valuable sentiment indicator. If there are too more longs than shorts, it implies that the market is currently more bullish. Extensive market manipulation by exchanges and whales, along with liquidity issues, often results in questionable market behaviour. Therefore longing and shorting with leverage, should nearly always be hedged and include very tight stop losses and realistic take profit targets.
During the period the Longs decreased to 30,500 and the Shorts decreased to 23,000. The difference between Longs and Shorts is 7,500, a decrease of 2,000 during the period. When Longs & Shorts decrease and L&S slowly exits this means longs taken profit, shorts stopped which indicates a bearish reversal. I forecast over the next week that the Longs will decrease and the Shorts will decrease, which is bearish for the price.
The L/S Ratio (Long/Short) is a popular barometer for investment sentiment. It is calculated by dividing the amount of security short selling (long) divided the actual amount borrowed and sold (short). If the Ratio is 1, then we have an equal amount of shorts and longs. This market oscillates and it is considered over-long or short if the ratio is higher than 60:40. This would imply a 0.66 short ratio or a 1.5 long ratio. More conservatively anything under 0.85 is over-shorted or over 1.25 is over longed. If this ratios are meet, the likelihood of a squeeze increases significantly.
During this period the L/S Ratio decreased to 1.3 in convergence with the recent price action. This has decreased the probability of a long squeeze. I forecast in the next week that the L/S Ratio will decrease and this signals a decrease of price.
The ATR (Average True Range) is a moving average indicator that measures volatility in the market. It is calculated by averaging the price volatility over a given period of time, say a week. ATR is a valuable risk management tool as it provides a clear signal of when markets are turning volatile or consolidating. As a trend trader using leverage, it guides me on setting stop losses and take profits levels while also telling me when to stay out of the market.
During this period the ATR increased by 22 to 220. This signals an increase in market volatility. I forecast in the next week that the ATR will consolidate and this signals a decrease of price action and an decrease of price.
References:
Heikin Ashi summary - investopedia.com/trading/heikin-ashi-better-candlestick/
Moving Average summary - investopedia.com/terms/m/movingaverage.asp
Support and Resistance summary - investopedia.com/trading/support-and-resistance-basics/
Fake exchange volume summary - blockchaintransparency.org/
Long summary - investopedia.com/terms/l/long.asp
Short summary - investopedia.com/terms/s/short.asp
L/S Ratio sumary - investopedia.com/terms/l/longshort-ratio.asp
ATR summary - investopedia.com/terms/a/atr.asp
Overall the last 7 days were bearish and I am bearish for the next 7 days.
Bitcoin is trading in the $3600 to $4200 range during the last week, 81.5% down from the ATHs, with a market cap of $63 billion. The chart indicates a continuation of the current downtrend. The price is closest to the 50 MA with a trend towards the 50 MA. The volume has decreased over the last week, which is supporting the current price action. The Longs have decreased while the Shorts have has decreased during the last week. The L/S Ratio has decreased in convergence with the recent price action, a bearish signal. Finally the ATR has increased indicating an increase of market volatility.
Detailed Summary:
This chart uses daily Heikin Ashi Candlesticks with a custom trend bar indicator, 4 MAs (20, 50, 100 & 200), L&S, L/S Ratio & ATR
Heikin Ashi candlesticks are great for trend and swing trading. Heikin Ashi means ‘average’ in Japanese because these candlesticks ‘average out’ price action vs traditional candlesticks that are based on OHLC (Open High Low Close). By averaging out price action this candlestick style reduces ‘noise’ and generates a much smoother chart pattern. This is helpful for trend traders as it is easier to identify the key trend in the market and to ignore smaller price volatility.
During the last week the price has ranged by $500, opening at $3800 and closing at $3600. The price has decreased over the period which is a continuation of the long term price trend.
Moving Average are also used on this chart to help identify major areas of S&R and general price trend action. I prefer to use simple Moving Averages on the daily time frame. The 200 MA is red, the 100 MA is orange, the 50 MA is yellow and the 20 MA is green. The choice of colours helps me to read the chart and see if price action is bullish or bearish. For example, if the red is on top and the green is on the bottom, it is clearly bullish. It is also important to note that the longer the Moving Average period, the stronger the support and resistance.
During the last week the price is closest to the 50 Moving Average and during this period it has trended around the 50 Moving Average. The 50 Moving Average is currently acting as resistance while the 20 Moving Average is acting as support. The key Support area is $3300 and key Resistance areas is $4200. I forecast in the next week that price will test the next support area.
Volume is a key indicator that I use to understand past, current and possibly future price action. Unfortunately a majority of the exchange volume is fake ‘wash’ trading so it is important to rely on data from reliable exchanges like Binance and BitFinex. Volume that supports price recent action helps strengthen my belief in a specific trend.
During this period volume has decreased in convergence with the recent price action. On a longer term time frame, the volume is in convergence with the long term trends. I forecast in the next week that the volume will decrease and this will support a decrease of price.
The Longs & Shorts data is from BitFinex, one of only two professional trade contracts exchanges with sufficient volume in the space, the other is BitMex. The number of contracts and the difference between the total longs vs short contracts is a valuable sentiment indicator. If there are too more longs than shorts, it implies that the market is currently more bullish. Extensive market manipulation by exchanges and whales, along with liquidity issues, often results in questionable market behaviour. Therefore longing and shorting with leverage, should nearly always be hedged and include very tight stop losses and realistic take profit targets.
During the period the Longs decreased to 30,500 and the Shorts decreased to 23,000. The difference between Longs and Shorts is 7,500, a decrease of 2,000 during the period. When Longs & Shorts decrease and L&S slowly exits this means longs taken profit, shorts stopped which indicates a bearish reversal. I forecast over the next week that the Longs will decrease and the Shorts will decrease, which is bearish for the price.
The L/S Ratio (Long/Short) is a popular barometer for investment sentiment. It is calculated by dividing the amount of security short selling (long) divided the actual amount borrowed and sold (short). If the Ratio is 1, then we have an equal amount of shorts and longs. This market oscillates and it is considered over-long or short if the ratio is higher than 60:40. This would imply a 0.66 short ratio or a 1.5 long ratio. More conservatively anything under 0.85 is over-shorted or over 1.25 is over longed. If this ratios are meet, the likelihood of a squeeze increases significantly.
During this period the L/S Ratio decreased to 1.3 in convergence with the recent price action. This has decreased the probability of a long squeeze. I forecast in the next week that the L/S Ratio will decrease and this signals a decrease of price.
The ATR (Average True Range) is a moving average indicator that measures volatility in the market. It is calculated by averaging the price volatility over a given period of time, say a week. ATR is a valuable risk management tool as it provides a clear signal of when markets are turning volatile or consolidating. As a trend trader using leverage, it guides me on setting stop losses and take profits levels while also telling me when to stay out of the market.
During this period the ATR increased by 22 to 220. This signals an increase in market volatility. I forecast in the next week that the ATR will consolidate and this signals a decrease of price action and an decrease of price.
References:
Heikin Ashi summary - investopedia.com/trading/heikin-ashi-better-candlestick/
Moving Average summary - investopedia.com/terms/m/movingaverage.asp
Support and Resistance summary - investopedia.com/trading/support-and-resistance-basics/
Fake exchange volume summary - blockchaintransparency.org/
Long summary - investopedia.com/terms/l/long.asp
Short summary - investopedia.com/terms/s/short.asp
L/S Ratio sumary - investopedia.com/terms/l/longshort-ratio.asp
ATR summary - investopedia.com/terms/a/atr.asp
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