This week I would like to discuss the possibility of a further correction next week, while still maintaining my very bullish medium and long-term view.
Very honestly, this is not to say a further correction will happen next week, but rather to pin-point where it may end, if indeed the pullback continues.
Starting with the reasons why a further pullback could happen and we only really need to look to the recent struggle to close the daily, weekly, and monthly candles above the $69,300 area, which is essentially the previous bull cycle high.
Source: Tradingview.com
Of particular note is the upcoming quarterly close at the end of the month, and the great need for the price to close above the former ATH by quarter end.
Source: Tradingview.com
Before I begin dissecting the downside levels I want to point out some events that BTC has taken in it's stride. Let's list them.
MT.GOX Disbursement
DMM Exchange Hack
Trump Guilty Verdict
H.J.Res.109 Apprehension
A 700 point correction in the Nasdaq
Remarkably, despite all those events Bitcoin has managed to close the month of May with quite an impressive bullish monthly candle.
And despite all these recent events Bitcoin has been seeing an influx of capital from some rather substantial whale wallets.
Source: Twitter.com
These whales have been adding around $1 billion worth of BTC per day, according to data from the cryptocurrency’s blockchain.
I believe there are strong parallels between Bitcoin’s current behavior and the market activity of mid-2020, before the bull run in 2021.
During that period, Bitcoin’s price remained relatively stable, yet on-chain activity, particularly over-the-counter (OTC) transactions involving institutional players, was exceptionally high.
Back to the potentiality for a further correction this week and two key places are pin-pointed according to my analysis.
Source: Babypips.com
Firstly, the calculated monthly pivot point for Bitcoin in June would seem like a logical starting point.
The $65,300 level is pretty much exactly the location of the monthly pivot point, so here is our first contender for a correction test.
Pivot point analysis shows that if the Pivot is lost (i.e bears take control under the pivot) then the calculated S1 (Support 1) is found at $58,500.
Source: Hyblockcapital.com
The other school of thought I have comes from Positioning data. 1-month positioning data shows that the biggest stack of buy orders sits around $64,000-$62,000.
Leveraged Liquidation data going back 3-months clearly shows that the $73,000 to $75,000 area has massive short liquidations if we shoot higher from here.
Source: Hyblockcapital.com
Conversely, the downside shows the scary proposition of mass Long liquidations between $56,500 to $50,000.
In the immediate term, the $67,000 level probably holds the key and only a close above the $69,300 area on a multi-day basis would secure the fortunes of bulls, meaning that would lead to a test of $73,500.
The Order Book, according to Tradinglite, shows significant buy support around the lows of this week. Typically, this type of build-up of buy blocks is a good sign for bulls.
Source: Tradinglite.com
Overall, we remain in a strong bull market. Holding your position in a bull market is key, so pullbacks should not be scary.
Source: Biyond.co
Biyond has a heap of buy signals (e.g. LINK$14.00, ETH $3,000 ETC), therefore I would more scared about losing my position in these Long positions rather than consider closing them in profit, or indeed natural short-term downside corrections.
