Bitcoin: Understanding the CME Futures Gap 1D (Aug.03)

3 ago 2020

X Force Global Analysis:


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In this analysis, we explore the Bitcoin CME Futures chart on the daily in order to understand the technical barriers that Bitcoin faces in its bullish rally.

Analysis

- A gap is an area discontinuity in a security's chart where its price either rises or falls from the previous day’s close with no trading occurring in between
- Gaps are common when news causes market fundamentals to change during hours when markets are typically closed, or when there are sudden movements within the market
- Regardless of the type of gaps, all gaps have a tendency of being filled.
- Tendencies indicate that while most gaps do get filled, understanding gaps from a probabilities perspective, sometimes gaps can be left unfilled
- The current chart for Bitcoin's CME Futures on the daily demonstrates that a major gap around 11.7k has been filled
- This gap had been in existence for almost a year, and was recently filled during Bitcoin's parabolic rally
- However, because Bitcoin's uptrend was so steep and sudden, the trend is extremely choppy, and has left a lot of gaps on its way
- There are major gaps around the following levels: 11.2k, 11k, and 9.8k

What We Believe

Given that these are all reasonable levels of correction targets, it's highly likely that we see a corrective move possibly filling the lower gaps below, before seeing another bullish rally to push forward beyond 14k levels.

Let us know what you think in the comment section below


Trade Safe.

10 ago 2020

Nota

After a clearer bullish candle filling the 11.8k CME gap with the candle body, we reanalyze the daily CME Bitcoin Futures chart.



Based on the Fibonacci retracement, we are currently facing strong resistance at the 0.786 Fibonacci resistance.

We have filled the two upper gaps, as three gaps below the current price level still remain unfilled.

Not to mention that the probability of all three gaps not being filled is highly unlikely, even if we take into account the probability of gaps potentially being filled by candle wicks, the huge gap at 9.7k is difficult to ignore, due to the size of the gap.

A correction is a matter of when, not if. The further we go up or the longer we stall at current price levels, the more brutal the correction will be. A corrective trend filling all the gaps at 9k levels is still considered healthy and relatively bullish over the long term, as a form of a pullback.