Bitcoin’s (BTC) tight range has put analysts in a fix, meaning, every bit of data is being analyzed to determine the direction of the impending breakout. Bitcoin options open interest data can provide some clues on what the larger investors are expecting but there are many other factors at play that could influence Bitcoin’s spot price.
Currently, the maximum open interest buildup in calls is at the $11,000 strike price and in puts at the $8,000 strike price. This suggests that the writers of these options do not believe that these levels are likely to be breached by expiry.
Crypto market data daily view. Source: Coin360
The immediate support is at the $9,000 strike price where there is an open interest buildup of 2,042.4 put options. On the upside, the $9,500 strike price has open interest buildup of 1,056.3 call options.
This suggests that the number of options buyers who believe that the price of top-ranked cryptocurrency on CoinMarketCap will not break below $9,000 is more than traders who do not expect the price to rise above $9,500, which is a mild positive.
BTC options data largely supports the view that the price could remain range-bound until the expiry. However, in case the price breaks out with force, options sellers will be forced to cover their positions and this could add fuel to Bitcoin’s price action.
The range in Bitcoin (BTC) has tightened in the past few days, which suggests that both the bulls and the bears are waiting on the sidelines for a trending move to start before jumping in to initiate a position.
BTC/USD daily chart. Source: TradingView
While the range-bound action has been talked about for many days, the biggest question is which way the breakout will happen. The directional movement index (DMI) indicator can be used to identify whether the bulls or the bears have the upper hand.
Along with it, the average directional movement index (ADX) can be used to see when the trend is likely to pick up steam.
In the BTC/USD pair, history suggests that the ADX starts a strong trending move when it is close to 10.80 levels (marked as ellipses on the chart). Currently, the ADX is at 17.92, which suggests that the range-bound action might continue for a few more days and the ADX can drop further before the price breaks out decisively.
The -DI (colored red) is currently dominant as it is on top and the +DI (colored green) is at the bottom, which suggests that the bears have a slight edge over the bulls.
If the price breaks below the immediate support at $8,900 and the ADX pushes above 25, it will increase the possibility of a deeper pullback. If the price rises from the current levels and breaks above $9,500 with a rally that pushes the ADX above 25, it will signal the possibility of a sustained up-move.
There are two critical things for traders to watch is the ADX level as it will indicate a possible sustained trend above 25 and the dominant DI.
BTC/USD 4-hour chart. Source: TradingView
The price is trading below both moving averages and the downtrend line, suggesting that bears have a slight edge. The immediate support on the downside is at $9,089.17 and below that at $9,040.48.
If these supports crack, the bears will try to break below the psychological level of $9,000 and challenge the support at $8,900.
If the price turns up and breaks out of the downtrend line, it will suggest accumulation by the bulls and could result in a move to $9,345.05 and possibly $9,500.
Cardano (ADA) is in a strong uptrend with the ADX above 40. The altcoin has currently formed a symmetrical triangle, which mostly acts as a continuation pattern with the price generally breaking out in the direction of the prevailing trend.
ADA/USD daily chart. Source: TradingView
The uptrend will resume after the bulls push the price above the symmetrical triangle and the recent high at $0.1380977. Above this level, the sixth-ranked cryptocurrency on CoinMarketCap can rally to $0.173 and then to $0.20.
Contrary to this assumption, if the bears sink the price below the triangle, the 20-day exponential moving average ($0.114) is likely to act as a strong support but if it cracks, a deeper correction to the 50-day simple moving average ($0.094) is possible.
ADA/USD 4-hour chart. Source: TradingView
The ADA/USD pair is currently below both moving averages and the -DI has become dominant, which suggests that the bears are attempting to make a comeback in the short-term.
A break below the triangle will be a negative sign as it could result in profit booking by the short-term traders. There is a minor support at $0.11 but if this support cracks, a deeper correction is possible. Hence, bottom fishing can be avoided if the price sustains below the triangle.
Conversely, if the price bounces off the support line of the triangle and…
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