TL;DR some unexpected action in the markets this week.
Last week closed heavily in the red, with bitcoin plumbing lows beneath $3,500 and looking decidedly as if it was planning on heading lower still. Indicators (and analysts) were predominantly bearish.
Incredibly, though, it didn’t happen. Despite falling volumes and momentum apparently being very much to the downside, BTC put in a double bottom, staged a rally and pushed back above $4,000, taking many traders by surprise. This was not classic capitulation and is, frankly, a curious development.
Bitcoin will encounter significant resistance in the $4,300–$4,600 range, which is where it temporarily topped out on Thursday after pushing above $4,400. This level saw a large amount of activity on the way down ten days ago, and bitcoin paused here in its slide, so this will take some bull pressure to move past. If we do, there’s more around $5,200 and, of course, unprecedented resistance at the $5,700–$6,000 range.
For now, there’s been some respite. Right now, on the weekly, we are seeing a green candle. But the big picture is far from clear, and without that expected final high-volume capitulation the ‘bottom’ lacks conviction. Thus we’d expect to revisit those levels again at some point in the short- to medium-term; the market likes to test these things to make sure. The reversal was lacklustre, so we’re still looking for sustained volume and a decisive move on the back of that before we can call it one way or the other.
As things stand, we’re consolidating in the $4,000-4,300 range, which is positive; there may even be a tentative bull flag forming, in which case we’d look for a push through $4,600 resistance and rapidly above $5k. Alternatively, of course, we’ll break down – at which point lower lows become far more likely.
In short, it’s a very interesting time but we’re not going to shout ‘Moon!’ prematurely. If volume and price both continue to increase, we’ll start to feel more relaxed. It’s more bullish than it’s been for a while, but the bear may have more fight left in him. BTC loves to keep us guessing.
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