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Tuesday Inferno market update

Tuesday Inferno market update

Analysis

TL;DR is it crunch time – again?!

 

Well folks, the hour is once again upon us. Much as we hate to resort to memes and cliches (ok, so we don’t hate them that much…), the next 24 hours are critical.

 

Sometime over the coming day or so we’re expecting a big move for bitcoin. Take a look at the chart, four-hourly scale, and you’ll see why.

 

That nice, high-volume green candle on Saturday faltered right at resistance, with the top wick perfectly touching the 200 moving average (4h) and the daily candle closing just under the 50-day moving average. With such a confluence of factors, the writing was really on the wall, and sure enough it wasn’t long before we saw a rapid fall to $3,470 (Stamp). That was a lower low in this recent leg of the market, wrecking any hope that we might be painting higher lows and on the way up.

 

And so here we are, sitting in the low $3,500s, waiting for the other shoe to drop. And while we might well see more short squeezes and sudden moves up, the most likely medium-term scenario is a retest of that 200 weekly moving average and the support we know is layered around $3,200 and the psychologically important $3,000.

 

There are three scenarios.

 

  1. We crash hard into the 200 WMA, perhaps deep below it, but huge buying pressure sends BTC soaring back up as traders pick up bargains. It’s a high-volume move and it effectively puts the bottom in: capitulation. The market consolidates a while and then gradually starts moving up again.
  2. We bounce off the 200 WMA, but not with enough force to demonstrate a convincing bottom. Instead, we fall into another descending wedge pattern or trade in a range, until it’s time to make a decision – the most likely one of which is back down below $3,200.
  3. BTC drops cleanly through the 200 WMA and enters a range with very little support between around $2,200 and $3,000, where it stays and consolidates much as happened when it dropped below $6k.

 

We can’t call what will happen at this point, but the reaction to retesting the 200 WMA will give us useful information as to the condition of the market and traders’ overall confidence. For what it’s worth – and this is not trading advice – we expect a short-term bounce at least at ~$3,200. Long-term, we think that’s going to be a good price. But over the next few weeks, we might well find that the real bargains are to be had in the $2,xxx range.

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