GB Market Commentary 09/06/2022
by Marcus Sotiriou
Altcoins continue to bleed as Bitcoin fails to establish a clear direction. Many traders are waiting on the side-lines due to key events on the horizon, such as ECB’s interest rate decision at 1.45pm, which could be the first European rate hike in 11 years which would be bearish for European markets. A rate hike seems inevitable in order to stop inflation becoming an even bigger issue, as recent data has shown that price rises are broadening across goods and services in Europe. This would mean European economies likely enter a recession in the coming months, as incomes become squeezed. The globalisation of markets means that this would affect all economies so equities and therefore crypto could suffer as a result in the short-term. In addition, CPI data in the U.S., which is the most influential region on markets like crypto, is released tomorrow. This will heavily impact the Federal Reserve’s actions going forward so it is also a highly anticipated event that will create volatility.
Determining if Bitcoin is in a bull or bear trend can be quite conflicting at times, but one indicator which deduces the general trend of the market is the Ichimoku Cloud and monthly Kijunsen. Historically, the 20-Month Ichimoku Kijun-sen for Bitcoin has been a reliable pivot for the direction of the market, shown by the below chart from Rekt Capital. You can see that when the Kijun has successful retests as support, price tends to continue in an upwards trajectory. When the opposite occurs and price tests the Kijun as resistance price tends to continue downwards.
Currently, the monthly Kijun is acting as resistance as Bitcoin is below the Kijun as it closed last month below. Typically, when this is retested as resistance it results in further downside, so it will be interesting to keep a close eye on what happens if/when this level is retested in the coming weeks/months. If this line, which is in the high $30k region, is reclaimed on the monthly time frame, we can expect a change in Bitcoin’s trend based on the trend reversals in 2016 and 2020. There was an anomaly to this pattern in 2014 when Bitcoin closed a month back above the Kijun but failed to result in a trend reversal, however the breakout was unconvincing in this case.