Trading conditions remain treacherous in the bitcoin markets considering a false breakdown below 3919 $ materialized yesterday to invalidate the near-term range, although price quickly rebounded back above 3900 $ on fairly bullish price action that has persisted into today and has kept the bears at bay for the time being. While the short-term technicals are already improving due to the bounce off of the 3850 $ local lows, there are still some worrying signals emerging on the charts that bear watching moving forward. No doubt we still [members-only content] but we don't think we've reached optimal levels just yet.
First up is a look at the 4-hour chart for a more granular view of the short-term setup where we can see that back to back [members-only content] yesterday led to a relatively steep selloff down into the upper [members-only content] zone and to the bottom of the still bullish Ichimoku Cloud on a large [members-only content] signal that broke near-term market structure, none of which is good news for the bulls. Neither are the falling EMA's, the now bearish 50 SMA, or the active dynamic resistance dots around [members-only content] $, all of which suggest more weakness in the near future. That said, SCMR did print a [members-only content] signal not long ago, the 100 SMA continues to rise, and the 200 SMA is acting as support for the time being, so a slow retracement back up to the [members-only content] $ area is possible before another leg lower materializes.
Moving on to momentum and volume, notice that Willy, RSI, and the Stochastic have all stalled out just above oversold territory but have yet to fully recharge, MACD is recovering but remains below its zeroline, and PPO is flashing buy signals but not strong ones yet, all leaving the door open to another downdraft. Additionally, exchange volume are more bearish than bullish for now and the volume profile setup is still very thin below [members-only content] $, which are supportive of more lower prices as well, although the A/D line remains quite strong which is another signal to buy the dip on the next leg down.
Next up is the 3-day chart for a broad view of the medium-term setup where we can see that the selloff yesterday sparked a [members-only content] bar on a small but bearish candle formation which painted on the close and confirmed resistance at the still falling 50 SMA, all suggesting a slight bearish bias moving forward. Also note that the 100 SMA continues to trend lower and the Ichimoku Cloud remains firmly bearish above and out in front of the market, again pointing to more downside, although the ascending triangle remains intact and support is substantial in the [members-only content]s $ which is why we would like an opportunity to take advantage of those prices if given the chance.
As far as momentum and volume are concerned, notice that Willy is getting heavy before reaching overbought territory, RSI continues to tread water in no man's land, the Stochastic has rolled over after a tag of overbought territory, MACD is slowly bleeding back towards its zeroline, and PPO is neutral and close to flashing sell signals, so it continues to look like the ~[members-only content] $ trading range will stay intact for the foreseeable future. The lackluster exchange volumes and flatlining A/D line both confirm this outlook for more consolidation, although the large VP notch around [members-only content] $ should act as a magnet after a breakout if indeed the ascending triangle holds true (yet another reason why we want to buy the dip along the uptrend line).
While price did bounce nicely out of the canceled VST ProTrade from late last week, follow-through has been unimpressive, price action is beginning to weaken, and the technicals are still fairly heavy so we're content with staying patient for lower levels before getting active on the long side again. We also don't mind being conservative in terms of risk due to the fact that price is still well within the medium-term trading range on still very uncertain signals on all timeframes, so sizing will stay small even if we get a chance at the still intact VST PT entry area in the not too distant future.