Bitcoin Trading Update for February 26th, 2019 (BTC/USD)

Market Commentary

The bitcoin markets continue to consolidate around the 3800 $ level following a dramatic selloff yesterday on what are still quite mixed technicals that point to more sideways action over the coming few days. While the shorter-term charts suggest that the bulls might return sooner than expected, which is why we are considering [members-only content], the longer-term charts continue to develop worrying signals that are likely to keep the bears in business as we get closer to Spring so we'll leave the PT entry areas where they are for at least another day or two.

4-Hour Chart

First up today is the 4-hour chart for a close-up view of the short-term setup where we can see that price is responding to the technicals very well for the time being considering the selloff yesterday stopped on a dime right at the still rising 100 SMA, the previously broken uptrend line, and the top of the  [members-only content] zone which led to a reversal back to the upside and eventually a [members-only content] signal yesterday that is being followed up by a [members-only content] today, a good sign for the bulls moving forward. So is the fact that all of the longer-term SMA's continue to move higher, strong dynamic support is still actively building below the market, and the Ichimoku Cloud remains bullish out in front of the market, all of which will help the bulls play defense over the coming days, however the EMA's are falling and are acting as near-term resistance and market structure is currently bearish and heavy so we don't think the bears are done probing short-term support in the mid-3000's $. 

As far as momentum and volume are concerned, notice that Willy and the Stochastic are both fully recharged and ready to move higher again, RSI has not reached oversold territory but is looking more healthy in general, MACD is about to cross back above its zeroline, and PPO has quickly shifted to [members-only content] signals, all of which favor the bulls for now but also leave room for another leg to the downside over the course of this week. Additionally, the A/D line is moving higher once again and remains elevated overall while exchange volumes return to normal, which should also help the bulls moving forward, although the volume profile setup is still very porous down to the [members-only content] $ area and again around [members-only content] $ which are both areas of interest to us in terms of support on potential weakness moving forward.

3-Day Chart

Next we want to zoom out to the 3-day chart for a broad view of the medium-term technical setup where we can see that price was rejected by the lower supply area last weekend which led to the pullback we've seen over the past 48 hours thus sparking the first [members-only content] bar since July of last year which led to a drop from ~8000 to 6000 $ over the course of about a week. Also note that the [members-only content] before then came in May of 2019 and led to an even bigger decline so this has been a fairly reliable signal during the bear market, thus if this one fails to result in a large drop then it will be another green shoot for the bulls in terms of the start of a new cycle. That said, the odds are still with the bears for now considering market structure remains technically bearish, the 50 and 100 SMA's are still in steady downtrends, and the Ichimoku Cloud continues to be firmly bearish above and out in front of the market, so we'll stay conservative until more convincing evidence of a true bottom emerges.

Moving on to momentum and volume, notice that Willy and RSI are pulling back from recent highs but remain in uptrends overall, the Stochastic has yet to recharge at all and is actually getting close to overbought, MACD continues to move slowly above its zeroline, and PPO is still flashing neutral signals, none of which helps with short-term directionality but do hint at [members-only content] in general. The volume indications appear to be confirming this view considering the A/D line remains under pressure while exchange volumes are mixed and the volume profile setup is still suboptimal, again telling us to be cautious moving forward at least until [members-only content].

Market Summary

Seeing as though network fundamentals remain relatively stagnant, sentiment is still highly mixed, and the technicals are rather indeterminant for the time being, we want to make sure to preserve capital for better opportunities at lower prices which is why we are staying on the sidelines for another leg to the downside before getting involved on the long side. Even when we do get active we are going to keep sizing small and risk tight so that we don't get caught off guard if indeed the bear market continues for awhile longer, at least until [members-only content] over the coming weeks.