Thread by @ColdBloodShill

The concerning picture for $BTC.

This is the first time we've seen the higher timeframes struggling under the selling.

Momentum and trend could be ready to shift strongly to the downside.

Let's explore the current picture and break it down in a momentum/education manner.🧵

As highlighted here, this is the first time in 2023 that we see the midpoint of RSI looking as though it will be lost.

This is an important (and simple) measure of who is in control of the market and to which direction we can expect the stronger moves.

I covered this thought process on a post for the $NQ back in January 2022.

It's a very very similar picture on $BTC at the moment - not as prolonged above the 50 level, but AO and RSI in a similar spot to the $NQ back then.

Next in our "concern" category is the divergence on the Awesome Oscillator.

This has always been in a very unusual spot, but given the current price action it looks as though it's very close to playing out.

There's positives and negatives to that.

We don't expect the divergence to be "played out" until the AO crosses to the opposite side of the mid point. At present we would still have the expectation that this divergence has not reached a climax.

The positive side is we can have a weak crossover and immediate resumption of bullish momentum although this is one of the more unlikely outcomes.

Our final point of concern is the market structure for $BTC.

At present this is a nice uptrend, but it's hanging on by a fine thread at the moment.

If this low breaks, it could get ugly, quickly.

Market structure provides some of the best defence points for the market.

You simply won't be offered better RR than longing an uptrending structure anywhere near the last low.

However if these lows break, price action tends to move very quickly.

Here's the example of when the market structure finally snapped at $32K.

And just another example of how protected these structures can be and the effects of when they're lost, this time just zooming in on the Daily.

Notice the protection at each low, and the result when it's finally lost.

RR is higher for longs at each of this important structural points and it makes a sensible place for shorts to take profit (after all you are counter-trend)

But when it finally goes, it's usually painful.

So we have:

- First loss of RSI 50 level in 2023
- Awesome Oscillator bear div
- Awesome Oscillator about to swing to bearish momentum
- Market structure hanging on by a thread

It doesn't paint a pretty picture at all of the current landscape.

Of course there are always multiple outcomes so I'll list them in order of the chance I believe has the most likelihood to play out.

1. Downside impulse move (large sell off candle/no relief)

I think this is the most likely outcome here with a bearish swing in momentum.

Market structure breaks, the divergence plays out, we get hit heavy to the downside and have a period of no-bounces or at it's a monster sell off candle that we just chop at the end of.

2. I think the 2nd most likely outcome is that we chop around this low for longer and then allow indicators to reset.

Then we're back in the unknown territory again.

3. Market structure holds and we trade higher.

Unless there's a huge change in the current market forces (maybe news related?) then I think it's the least likely option that we just continue up from here.

These are really just my thoughts and a bit of an education dive into the reasons for the thought process.

I'll react to whatever actually happens in price, but this is a very interesting point to analyse.

As I currently see this, the market looks as though it's hanging on by a thread to the market structure, looks as though the momentum is about to swing down bearishly.

Now you're faced with the decision, take the long based on the best RR you'll receive in an uptrending market with invalidation on market structure breaking, or short into a momentum breakdown.

Last option of course is just fucking off for a while and ignoring the PA.

Some additional education points:

RSI/AO is a very simple trend system on HTF.

Midpoints (50 level for RSI/0 for AO) are not lost/regained often on HTF so when they are it’s worth paying attention.

I don’t care where price goes, just laying out the technical side for education