After three weeks of trading within the same range, could price compression lead to a breakout for BTC?
Last week saw boring price action for BTC.
Monday was the only exception when the weekly low was set at $27,180 following ISM Manufacturing and a CT rumor regarding a Red Notice for CZ. BTC then bounced back up when CZ denied the rumor, which caused short-covering.
Early on Wednesday, BTC set the weekly high at $28,814 before drifting down.
In recent days it’s been trading sideways around $28,000 with price becoming more and more compressed.
Even job data on Friday barely moved the market.
Weak ISM services employment index, Jolts, ADP, and jobless claims were met by solid NFP and unemployment data which kept things steady. Eventually (for the 3rd time in a row) BTC finished the week basically where it started.
Our approach remains the same as long as BTC stays in the range.
We focus on intraday long and short opportunities, keep expectations low for each trade, and look for levels in the range where the price was reacting before and any signs of momentum change to take a trade.
Intraday moves are opportunities for fading rather than continuation trades since the market keeps trading back and forth.
Traders with directional bias should also close part of their position when the market is cooperating and renew it later when the market comes back.
$28,000 is an important area for mean-reversion traders where the biggest volume is traded and it works as a pivot point.
Bear in mind that the longer the price stays in the range getting compressed, the bigger and more violent the subsequent move is likely to be.
BTC has been trading sideways for 3 weeks with even tighter price compression in recent days so a big move could happen soon.
Traders bored by the recent price action may be caught off guard and react emotionally. You should aim to be prepared, ready, and in control.
Wednesday’s US CPI release is the key focus of this week.
It’s a key data point for the FED before its next meeting in early May and it coincides with both the ETH Shanghai fork and FOMC meeting minutes so all in all it’s an important day that could cause a sizeable move.
Other data to keep an eye on this week:
Monday: Wholesale Inventories
Thursday: PPI, Jobless Claims
Friday: Retail Sales, Industrial Production,
We have also Fed speakers on Monday and Tuesday.
Let’s see if BTC finally breaks out of its range this week – something that most traders are looking forward to as that would present more opportunities.
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