Bitcoin Trading Update for April 3rd, 2019 (BTC/USD)

Market Commentary

The bitcoin markets continue to exhibit a surprising amount of strength in terms of price action in the face of what are now overbought short-term technicals, which is even more impressive considering that the parabolic spike top at 5080 $ has already been tested and washed despite a rather hefty retracement yesterday. All of this tells us that this move is likely not over yet so we continue to expect another leg higher up at least to the [members-only content] $ level, if not the [members-only content] $ resistance area, which is certainly good news for the bulls over the coming days, however the higher price runs before a legitimate pullback the bigger the fall will be once it materializes which is something to keep in mind this week. Also, given the stretched nature of the technicals, said pullback could happen at any time so traders should stay cautious with new longs above [members-only content] $. 

6-Hour Chart

We'll return to the 6-hour chart today as it remains the best view of the short-term setup where we can see that price appears to be consolidating within a bullish ascending triangle/pennant pattern on [members-only content] signals and still relatively bullish candle formations while market structure remains encouraging, all pointing to higher prices in the near future. So do the moving averages, all of which continue to accelerate to the upside, the still-active dynamic support dots at the [members-only content] $ level, and the firmly bullish Ichimoku Cloud out in front of the market, however price is struggling with the new supply area and there is room to fall to test the bottom of the triangle around [members-only content] $ which is a likely target for a VST retracement before a breakout to new highs. 

Moving on to momentum and volume, notice that Willy, RSI, and the Stochastic are all now pinned in overbought territory while MACD begins to roll over and PPO starts to flash strong sell signals for the first time since February, all suggesting the need for a recharge to the downside in the not too distant future, although they could also be signs of strength in a post-bear market environment so we don't think they alone can stop the rally at this point. The still very bullish exchange volumes and the rising A/D line both confirm the likelihood that the market remains strong over the near-term, although an extremely thin volume profile setup below the market confirms that a substantial pullback is highly likely before a true test of [members-only content] $. 

Daily Chart

We'll also take a look at the daily chart once again to get a view of what the recent action has done to the medium-term setup, and we can see that price continues to make progress into the [members-only content] zone following the ascending triangle breakout on [members-only content] signals and generally bullish candle formations while market structure continues to improve, all good signs for the bulls moving forward. So is the fact that price has closed above the Ichimoku Cloud and the 200 SMA for the first time since January of 2018, the EMA's and shorter-term SMA's continue to pick up steam to the upside, strong dynamic support is still building below the market, and the Ichimoku Cloud is turning more bullish out in front of the market, so it looks like an extension to the upside is likely over the coming days. That said, resistance becomes increasingly heavy above [members-only content] $ up to [members-only content] $ so we'll get truly cautious once the price reaches those levels. 

As far as momentum and volume are concerned, notice that RSI just joined Willy and the Stochastic in overbought territory while PPO begins to flash strong sell signals, which typically indicate the need for a pullback and will eventually trigger one, although MACD remains strong so it could be the case that overbought conditions are signaling strength as opposed to fatigue for the time being. Additionally, exchange volumes remain firmly bullish and the A/D line is accelerating higher, both confirming the recent strength and current bullish bias, however volume profile leaves something to be desired so we continue to think that a selloff back below [members-only content] $ to establish another higher low is likely before a break above the key [members-only content] $ level. 

Market Summary

Not surprisingly there has been a lot of chatter over the past 24 hours regarding whether or not the bear market can now be considered over, and while we think the odds are good that it is we don't think that the pain has ended or that a new bull market is just around the corner. An extended period of accumulation/consolidation is likely in the ~[members-only content] $ region before a new bull market materializes, which implies we are getting near the top of the range and therefore can expect a period of weakness in the not too distant future once a legitimate top is put in between [members-only content] $.