As expected there were a few retests of sub-3800 $ levels yesterday due to what were still quite bearish technicals, one of which established a new local low at the 3730 $ level, although to our surprise the market bounced sharply off of those new lows back to the upside above 3900 $ during the Asian session which has shifted the near-term technical outlook to more bullish since yesterday. Granted, there still isn't much for the bulls to work with from a medium to long-term perspective, which we'll discuss via the 3-day chart below, however the longer price can stay above the [members-only content] $ area the better the odds are of eventually seeing the rally up to the [members-only content] $ region that we discussed at length last week. While we still think this outcome is unlikely, it remains a possibility nonetheless, but if [members-only content] $ breaks then [members-only content] $ is probably coming in short order.
We'll zoom into the 4-hour chart today for a more granular view of the short-term setup after the overnight rally and we can see that the demand area was able to provide enough support to spark a [members-only content] signal following the final rejection down into that area which was followed up by a [members-only content] on a neutral signal, all good signs for the bulls moving forward, although the recent candle formations have been lackluster as the still bearish 50 SMA continues to act as resistance so we don't expect too much action over the near-term (certainly not above [members-only content] $). Also note that the EMA's are still slightly bullish and are acting as support for now and market structure is trying to improve via a short-term higher low above 3474 $, however the longer-term moving averages remain bearish, strong dynamic resistance continues to build overhead, and the Ichimoku Cloud is still growing more negative out in front of the market, so the bears are still in control despite taking a breather recently.
Moving on to momentum and volume, notice that Willy, RSI, and the Stochastic are all trending higher now with plenty of room to run, MACD is close to crossing back above its zeroline, and PPO is back to neutral, all of which suggest that the bulls could have enough gas for another leg into the [members-only content] $ area before the bears return in earnest. Additionally, while exchange volumes continue to favor the bears, the A/D line and volume profile setup are fairly bullish which is another reason why there could easily be more near-term upside before the bears move back in to test stronger support in the [members-only content] $ region (which we think is very likely in the near future).
Next up is the 3-day chart which is not nearly as sanguine as the 4-hour chart above considering SCMR continues to print all red signals on mixed candle formations and broken market structure while new dynamic resistance is now building around [members-only content] $ in addition to the even strong levels still actively building overhead, none of which bodes well for the bulls moving forward. We can also see that the EMA's continue to stack to the downside, the 50 SMA is falling further below the 200, the 100 SMA is about to cross below the 200 as well, and the Ichimoku Cloud continues to expand to the downside above and out in front of the market, all confirming that the bears are still firmly in control. Granted, the upper demand areas appear to be attracting fairly strong support for the time being which is encouraging in terms of trying to find a sustainable cycle bottom in the not too distant future, but we still need a capitulatory selloff which is why we continue to think [members-only content] $ is the truly important level to watch over the coming weeks.
As far as medium-term momentum and volume are concerned, notice that Willy is finally joining the Stochastic in officially oversold territory while RSI rests right on its -80-line, not to mention PPO is still flashing strong buy signals, all of which are fairly encouraging for the bulls overall, however MACD remains anemic below its zeroline and none of these indications are showing any immediacy so we don't expect them to be much all that much at this time. Additionally, exchange volume are certainly still leaning bearish but not bearish enough for capitulation, volume profile is thin below the market but also still shows a notch around [members-only content] $, and the A/D line continues to stagnate but is also still quite elevated, so mixed is the word we would use for volume right now. Overall it looks like the market wants to consolidate inside a ~[members-only content] $ range over the coming days but with a still intact bearish bias overall that should rear its ugly head once again in the not too distant future for the test of [members-only content] $ that we've been mentioning recently.
While it is encouraging to see the mid to high-3000's $ attract enough buyers to keep the bears at bay despite the still overwhelming bearish technical setup in general, we're not sure how much longer they can continue to play defense considering the current state of the charts as well as the state of the network fundamentals. No doubt we think that talk of miner death spirals and double-digit prices are way overblown and are likely a sign that we are close to capitulation, but it also means there is a lot of work to do in terms of healing the market enough to create a solid foundation for the next bull cycle. Granted, we are certain that this will happen eventually, but as we've said before its probably a good idea to prepare for at least another [members-only content] months of crypto winter before rays of sun are seen again.