BTC is breaking out! Which levels should we keep an eye on?
The market is looking better and better, but where do the opportunities lie?
The price action on BTC (Bitcoin) has been tightening, and the trading volume in the market, both on BTC and altcoins (alternative cryptocurrencies), has been significantly decreasing. This phenomenon is commonly observed during a prolonged sideways period in the market. During such sideways phases, traders often become restless due to boredom. This restlessness tends to lead traders into a cycle where they start to force trades, taking positions they might not genuinely support. This situation plays right into the hands of larger institutional players who manipulate these conditions. They exploit the impatience of inexperienced traders, leading them into making incorrect decisions and essentially trapping them.
We are witnessing this pattern once again in the case of BTC. I've been emphasizing for weeks that we might be experiencing a phase of manipulation. Last week, I even authored an extensive document discussing the AMD pattern. You can access this document here: https://drive.google.com/file/d/1_8mnGyu8Mm2-cDdvSZObQ4D9GxxVxzX6/view
In that document, I also outlined a scenario in which BTC might find itself, a scenario that seems to be unfolding at the moment. In this edition of the trade letter, I will demonstrate how the AMD pattern appears to be playing out on BTC and which altcoins could potentially become interesting options if BTC continues its current trend.
BTC-USDT 4-hour chart
As you can read in the above-mentioned document about AMD, the AMD pattern is formed by larger players to trap inexperienced traders. On BTC, we are seeing that the manipulation phase seems to be over as we have experienced a strong push that reclaimed the old accumulation range. Assuming that we are currently in the distribution phase, from this point onwards, we want to observe a strong continuation of the price. A distribution phase is typically of short duration but highly explosive. This is because traders who didn't take a long entry during the manipulation phase now experience FOMO (Fear of Missing Out) and want to enter at higher levels, accelerating the price. The price targets to watch as resistance are:
- $31.4, which is the range high of the accumulation range and often serves as resistance.
- $32.4, a significant liquidity level on the daily timeframe.
ETH-USDT 4-hour chart
ETH also looks very strong. The price has ultimately removed all liquidity below the range low and has strongly bounced back. The range midpoint has already been reached, but I am quite confident that there is more strength in ETH, and in the short term, it will likely reach the range high around $1932. However, this doesn't mean you should blindly open long positions now. The price is currently situated in the middle of the range, which is a no-trade area according to range-trading principles.
The strength in both BTC and ETH also gives me confidence that there might be room for altcoins to emerge. Therefore, let's take a closer look at two altcoins on my watchlist: ARB and LINK.
ARB-USDT 4-hour chart
ARB is a relatively new coin compared to other altcoins. New coins haven't undergone a full cycle yet, meaning there are fewer bagholders eager to sell their bags at the first pump. Therefore, I anticipate that these new coins will perform better compared to major altcoins like ATOM, AVAX, LTC, etc.
ARB has formed multiple liquidity sweeps within the daily order block and has bounced from there. We observe that this bounce has led to a break of structure, as a higher high has been established. Personally, I believe that ARB will continue its uptrend from this point, and I see $1.35 as a realistic target.
LINK-USDT 1-day chart
Following the deviation below the range, LINK has surged powerfully upwards, placing itself currently in the middle of the range and bouncing off a daily order block. Additionally, LINK successfully implemented a new update two weeks ago, which could act as a catalyst for its price.
LINK-USDT 4-hour chart
On the 4-hour timeframe, we observe that LINK has removed the liquidity at the lower end and subsequently broken through the trendline. Unfortunately, a higher high has not been established yet; for that to happen, LINK must first break through $7.51. If this occurs, I believe that LINK could create new highs and gradually approach the $10 mark, which is also my target.
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