Yesterday's events have shaped today’s you and me. Not everyone can do what they want or become who they want to be. We always think that once we grow up, we can solve all problems, but later we realize that growing up is the beginning of all problems. Once a person is dissatisfied with their current life, they will always long for the past. The cost of growing up is slowly losing the original self.
Over the weekend, the market mostly showed a fluctuating trend, and then today, it once again declined, reaching a low point. How should we describe this market? At any time, we are not afraid of a drop; we are afraid of a continuous decline. The overall market operation should also be within our expectations. From the beginning, we have been looking for a correction, and the final result is indeed so. Moreover, in our operations, we have basically captured most of the profits from the corrections. Initially, we believed that there would be a decent rebound below 108,000, but over the weekend, the highest rebound only reached above 109,000 before it retraced again, which was indeed too weak. This also led to our previous long positions below 108,000 being exited at breakeven after moving the stop loss up, resulting in a lonely trade.
Returning to today’s market, we will first look at the distribution of liquidity. From a long-term liquidity perspective, most short positions have chosen low leverage, while long positions have opted for higher leverage. Currently, the total amount of short liquidity accumulated below 120,000 is greater, but in the price vicinity, there is slightly more long liquidity. Therefore, we can expect that the market may clear downwards in the short term. If it quickly recovers, we can then look forward to a futures short liquidation rebound. In the short term, for the long liquidity below to be cleared, it needs to retrace to the 106,000-105,500 area, while the short liquidity above is around 108,900 and 110,200. In terms of spot premium, there have not been any significant changes, indicating that the market currently has no strong interest under the continuous decline.
From a technical perspective, it’s a new week. First, let’s look at the weekly chart. Last week, the K-line closed with a bearish candle again, forming a three consecutive bearish arrangement. The technical indicator MACD on the weekly chart confirmed a death cross and formed a top divergence. This is a large cycle-level divergence structure that has appeared again after the top divergence in 2021. After the divergence in 2021, there was a significant correction. According to the previous round of MACD adjustments, the low point was around 74,500, and there was a significant drop with increased volume. If this round of weekly divergence shows strength, the normal trend would lead to a periodic lower low. The large-scale trend formation has been in place for a long time, and perhaps we will indeed see Bitcoin at a relatively low price.
On the daily chart, it is still in a continuous bearish trend. It has once again broken below the key trend line of MA120, confirming a weak bearish trend within the daily cycle. For the daily chart, after the bearish cycle completes, there will be a market repair. If the daily chart continues to seek support downwards, the rebound that can occur during the subsequent market repair will be weaker. A simple understanding is that this is a vicious cycle, just like when the daily chart was in a strong bullish cycle, the strong market's indicator repair was also weak in its downward momentum, and ultimately, the market structure was a continuous rise. Currently, looking at the larger picture, there is still a significant support trend around 97,000 below the daily chart. In this kind of daily bearish trend, if we are to operate based on the trend, the most suitable approach is to wait for the daily chart to first show a weak rebound, complete the market repair, and then set up a short position.
On the four-hour chart, the situation is one of low-level fluctuations. To be honest, I cannot be certain whether it can stop falling here. According to the technical indicators, the market is in a bullish cycle in MACD, but the strength is too weak, which means we have hardly seen any strong rebounds. Personally, I currently believe that there will still be a correction in the short term. If it can rebound slightly, that would be best, as we are now at the bottom entering a fluctuation phase. If it can reach around 109,000, then we can set a short position to look for 106,000 below, and then buy long. This is what I currently consider a reasonable market trend.
In terms of operations, as mentioned above, if the rebound can clear the short-term high liquidity above, which is concentrated around 108,900, and then complete the downward long liquidity clearance, if it goes down directly, then we will wait to buy long in the 105,500-106,000 area.
【The above analysis and strategies are for reference only. Please bear the risks yourself. The article is subject to review and publication, and market changes are real-time. The information may be outdated, and strategies may not be timely. Specific operations should follow real-time strategies. Feel free to contact us for market discussions.】
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