The markets have been rumbling this week, especially in anticipation of the FOMC interest rates decision on Wednesday. When the decision finally arrived, +75 BPS (as usual), the market reacted by sharply rising before tanking back down.
Bitcoin however took the opportunity to further cement its long-due breakout from the multi-month descending triangle.
Let’s take a look.
Previous Analysis
Bitcoin broke out nicely according to last week’s analysis. The asset is still bullish, in case you were wondering. However, the smart money seems to have not finished accumulating. Currently, Bitcoin’s price sits at $20,575.
After Friday, 28 October 2022, BTC went into consolidation mode, ranging throughout the whole week. Range chart patterns are usually used to stop out traders and clear liquidity build-up on both the buy side (BSL) and sell side (SSL).
What this means is that most conventional traders like to set their stop losses below the ‘support’ or above the ‘resistance’ believing the price won’t cross these limits. This builds up liquidity in these zones.
Smart money, A.K.A Exchanges, ensure they take out all of these liquidity pools before pushing prices in the direction they want. This results in liquidations like the ones below:
In the image above, on November 2, 2022, the large candle indicated in the Bitcoin chart above resulted in the liquidation of $53.28M worth of Shorts and $126,184M worth of Longs across 9 of the largest crypto exchanges.
So What is Likely to Happen Next Week?
Institutional players must take out the liquidity on both sides leaving behind a chart that looks more or less like the illustration below.
The price of the asset enters consolidation and the smart money pulls liquidity hunts toward the end of the range before moving aggressively in the direction of the general trend – in this case, up.
Checking out the Bitcoin chart, we can see that so far there has been one tiny liquidity hunt on the BSL. Knowing how exchanges are hungry for traders’ money, it is unlikely they will leave this range without pulling a few more hunts.
This leads us to conclude that next week bitcoin will still be in the $20k to $21k range with occasional Sell Side and Buy Side liquidity hunts. If you are a trader, this week is not a good week to be in the Bitcoin market.
However, after the range, the smart money will push Bitcoin to the upside. This is unlikely to happen in the course of next week. Cheers, and stay safe in the markets.
Current Price: $20,575
Verdict Next Week: Range Between $20k and $21k
Verdict November: Bullish
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.
