SAMT Blog
BTCUSD: 100k or 10k?
18. January 2022, by SAMT Guest
Technical Analysis, Guest Author Article
This analysis is based on the Wickoff Theory of Market Cycles, and aims to identify the current position of the BTCUSD in its trading cycle in the mid to long-term perspective, and to estimate the probability of the future price action of the asset.
The Wickoff Theory of Market Cycles states that the price cycle of a traded instrument consists of 4 phases – Accumulation, Markup, Distribution, and Mark Down
According to this approach, we can identify on the Weekly time frame chart that the BTCUSD has likely entered the Distribution Stage.
The next step will be to watch the validation of the distribution stage, which would lead to the Mark Down Phase, or an invalidation of the distribution, a Re-accumulation phase, pushing the market to retest its highs.
Scenario 1 – BTCUSD price action would range from the Critical Line (~44000) and the Liquidity Point (~48000) line, allegedly where large players buy and sell, until it gathers enough impulse for a possible rally up to the High (~65000).
Scenario 2 – BTCUSD would range between the aforementioned levels, and fail to break the upper point of liquidity, opening the way for the Mark Down Phase by closing and holding below the Critical Line (~44000). This could pressure the market to the lower Point of Liquidity, aprox. 33800.
It is also important to notice a Head and Shoulders pattern on the Weekly Chart, which reinforces Scenario 2. Should BTCUSD observe another weekly close below the Neckline and the Critical Level, around 41300, we could see a substantial decline in the price of the asset, some 66% down to the 13700 level, according to the traditional calculations of the H&S pattern, which will confirm the Mark Down Phase.
It is evident that several long and short trading opportunities will occur on the Daily and Hourly timeframes, testing the indicated levels. This analysis, nevertheless, strives to present the big picture and support investors and traders in forming a conviction on the long term market direction.
About the author
An entrepreneurial Investment Advisor with over 10 years experience in Financial Services, accomplished with the Level III exam from MTA/CMT, Antonio has worked in a number of asset management companies in Switzerland, and has used technical analysis as the base premiss to market approach in various asset classes such as Equities, FX, Commodities and Cryptos, in diverse markets like Latin America, Europe and South-east Asia.
About the author
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