One of the main reasons why we as traders and analysts need to be flexible and nimble when interacting with financial markets, especially ones as volatile as crypto, is because the conditions can change very quickly particularly with regard to the technicals which we continue to think are the primary driver of price action in bitcoin right now. We mention this because a quick change appears to be materializing now on the shorter-term charts given we are seeing some encouraging signals that were nonexistent yesterday. Granted, this does not necessarily mean that a rally is imminent, or even likely, considering that the majority of the short to medium term technicals remain firmly bearish, although it could mean that the countertrend rally back up to the [members-only content] $ region that we mentioned yesterday indeed materializes before another move to the downside does.
Today we'll zoom back into the 4-hour chart where the previously mentioned green shoots are beginning to emerge, such as the market structure double bottom that is developing just above the still intact demand area within which we still have a [members-only content] signal in play that has been followed up by a series of [members-only content] that are creeping higher and have broken above the short-term downtrend line, all good signs for the bulls moving forward. Also note that price is trying to move above the slowly reversing EMA's and so far the restest of the broken trendline has held resulting in a [members-only content] signal on the current candle, also confirming some upside potential, although all of the other longer-term SMA's continue to fall, multiple levels of strong dynamic resistance continue to build overhead, and the Ichimoku Cloud remains firmly bearish out in front of the market, so despite some encouraging indications recently we doubt the bulls can get past the [members-only content] $ without a legitimate retest of [members-only content] $ first.
As far as momentum and volume are concerned, notice that the Stochastic has started to move higher out of officially oversold territory with plenty of room to run higher, RSI is moving up as well but failed to fully recharge before reversing, Willy continues to stagnate just above oversold territory, MACD is just below its zeroline but is not yet accelerating, and PPO remains neutral, all of which could support a countertrend move back above [members-only content] $ in the near future but also indicate that more downside pressure is likely following that potential move. Additionally, exchange volumes are dwindling as the double bottom develops and there is still a large volume profile notch just below [members-only content] $ that could use some more attention, both supportive of a bounce from current levels, although the A/D line remains under pressure which tells us that the path of least resistance indeed remains lower longer-term so we would [members-only content] if given the opportunity.
We also want to return to the daily chart once again where we can see that the near-term positives that we spoke about above are barely noticeable on this timeframe, such as the double bottom, and SCMR is still printing [members-only content] signals on mixed candle formations and heavy market structure, all pointing to more downside at some point, although we are getting another [members-only content] right now which does bode well for the bulls over the near-term. Also note that all of the moving averages continue to pick up steam to the downside, short-term dynamic resistance is still actively building at [members-only content] $ in addition to the even stronger levels above there, and the Ichimoku Cloud continues to grow more bearish out in front of the market, all confirming the still intact bearish bias but with room to run higher over the next few days. Granted, if price can continue to consolidate above the 3210 $ level while the shorter-term technicals continue to improve over the next few weeks then there could actually be more upside potential above [members-only content] $, but for the time being we think this is unlikely so we'll stay cautious overall.
Moving on to momentum and volume, notice that Willy and the Stochastic remain pinned in officially oversold territory but look ready to start moving higher soon, RSI has already begun to move higher following a nice bullish divergence on the 3210 $ low, MACD is back above its zeroline after it too printed a bullish divergence, and PPO is still flashing strong buy signals, all of which support higher prices over the near-term. Having said that, exchange volumes remain firmly bearish, the A/D line remains under pressure and is close to breaking down to new lows, and volume profile looks atrocious both above and below the market, all of which favor the bears moving forward. No doubt it's getting to be a fairly murky technical picture as some hints of bullishness emerge for the first time in a while, although we remain skeptical overall until the bulls prove themselves with a convincing breakout above [members-only content] $ so on the sidelines we remain for now.
While we are nowhere near abandoning our call for an eventual test of the [members-only content] $ level (or below) before we can call this bear dead, the minor green shoots that we are seeing emerge on the shorter-term charts are forcing us to consider other possibilities for the first time since the breakdown from 6k $. We are quite certain that [members-only content] is a prerequisite to any path forward at this point, but we will admit that its possible that it holds which would likely put the kibosh on the bear case at least for a while (and potentially altogether). Again, the fact that the prevailing LT trend remains down and most of the technicals remain bearish still point to the likelihood of another new cycle low before all is said and done, but we must admit that we are not as confident in that forecast as we were just a few short days ago.