Following a spike top to a new local and regional high of 9477.70 $ yesterday, sellers began to return in earnest which has put pressure on price over the past 24 hours and has driven the market down below the key 9000 $ level this morning on deteriorating short-term technicals, which likely means more weakness or consolidation moving forward. The announcement of Facebook's new Libra project is also likely adding some selling pressure to the market for the time being, although we continue to think that this will be a good thing for the crypto space overall over the longer-term. Regardless, the technicals remain in charge and they continue to tell us to try to buy dips into key support areas if given the opportunity, which is what we are hoping for over the rest of this week.
First of all we want to zoom out to the 12-hour chart for a broad view of the short-term setup where we can see that price is pulling back from the top of the ascending channel and the new supply area following a doji candle formation on the highs yesterday which has pushed price down to the upper EMA and close to the top of the upper demand area where support should begin to emerge should price get there over the coming days. We currently think there is a fairly good chance of this occurring due to overbought momentum and a lack of near-term support above [members-only content] $, so [members-only content] $ seems reasonable for a retracement target, although SCMR is still painting bright green signals, all of the moving averages continue to rise, multiple levels of dynamic support continues to actively build below the market, and the Ichimoku Cloud is still growing more bullish out in front of the market, all suggesting that [members-only content] so its possible that [members-only content].
As far as shorter-term momentum and volume are concerned, notice that Willy is still slowly moving higher but is very close to overbought, RSI has started to roll over already, the Stochastic remains pinned in overbought territory, MACD is rolling over as well, and PPO is flashing weak sell signals, all of which are acting as caution lights to the market, therefore we expect some additional selling over the coming days, or if not then at least more consolidation between [members-only content] $ over the remainder of the week. Volume profile supports this view, although exchange volumes and a strong A/D line will make if difficult for the bears to get any sustainable traction moving forward.
We'll also zoom out to the 3-day chart where we can see that it's appropriate for price to be pausing around current levels considering the bulls are having to contend with the lower supply area and longer-term OTE short zone, both of which should keep prices below [members-only content] $ for at least another week or two and should also add some selling pressure to the already uncertain marketplace, hence if the [members-only content] $ area cannot hold we'll head to the sidelines for awhile until things settle down. Having said that, market structure remains firmly intact, all of the moving averages continue to move to the upside, multiple levels of dynamic support are still actively building below the market, and the Ichimoku Cloud is becoming increasingly bullish out in front of the market, so the medium to long-term outlook remains very positive moving forward.
Moving on to momentum and volume, it comes as no surprise that Willy and the Stochastic are still pinned in officially overbought territory given the price action this week, and the same goes for PPO, none of which is bad for the bulls in and of itself considering overbought momentum has been a boon to price over the past few months, although it is concerning that RSI and MACD are flashing fairly significant bearish divergences which will add to the selling if [members-only content] $ is broken over the coming days. The volume indications, however, are telling a more constructive story as the A/D line remains very strong, exchange volumes are encouraging, and volume profile continues to fill-in above 7000 $, so there is quite a bit of leeway for the bulls even if things do get ugly over the shorter-term.
As the day progresses the market conditions are slowly improving which yet another sign that the bulls are still in full control of the market despite the likelihood of more consolidation over the course of this week. The fact that they also defended the 8900 $ level, which is lacking in any significant historical or technical support, is another sign of their strength overall, so at this point it's going to take some luck to get price low enough to justify a ProTrade without a major exogenous market shock.