We can go higher. But, we're overbought on all major timeframes while OI is up and Funding is very positive.
Longs now look overweight. We'd wait on pullbacks to add to our position.
TLDR
- Bitcoin has surged 10% this week from $40k to nearly $44k but is very overbought on major timeframes.
- Open interest and leverage have ramped up significantly, indicating susceptibility to long liquidations if prices drop.
- Upside resistance was found around $45.6k; support was around $42.3k.
- We see move down to flush excess leverage as necessary; we wouldn't chase prices but will be ready to buy dips to $38k
Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.
Macro analysis
- ADP Employment Change is out today. If we see a low figure, the markets may start to price back out the “soft landing” narrative.
- The DXY continues its relief rally. Can this continue to suppress $SPX from further upside?
Technical analysis
- BTC is beginning to find local resistance in the low $44k area.
- A local level of support to the downside is $42,300.
- The significant resistance above us is at $45,600.
- BTC is very overbought on all major timeframes.
- We wouldn’t chase this move higher from a TA perspective. However, we would look to lightly DCA into BTC if there is a pullback to $38k.
Market mechanics
- The Open Interest has ramped up significantly, up 10% in 24 hours from $18.28b to $20.22b.
- The OI-Weighted Funding Rate has stayed relatively flat at 0.01%, suggesting a balance between Longs and Shorts for BTC. Alts is where the Funding has turned extremely positive. BTC is in a healthier balance in terms of positioning compared to most Alts.
Cryptonary’s take
Bitcoin has had phenomenally positive price action over the past few months, with price moving up 10% since Monday, from $40k to just shy of $44k.However, BTC is beginning to look slightly exhausted to the upside. On the larger timeframes, we’re very overbought, while Open Interest has soared higher in the past week, indicating a lot of leverage in the system. A lot of this leverage is likely Longs holding from lower prices.
However, if there is a big movement down in price, we may see these Longs book profits, plus late Longs would be liquidated. We see a large move down in price as necessary to flush the excess leverage out.
We wouldn’t look to buy BTC at current prices with the move-up that we’ve had. However, if there is a more substantial pullback (which we expect at some point), we would look to DCA into this. The first area of interest to DCA is $38k.
Let’s see if we get a more substantial pullback, even if that pullback begins from slightly higher price points.
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