Once again the bitcoin markets have been beholden to the technicals over the past 24 hours which means once again price has been moving to the upside in a steady fashion and on encouraging price action reaching up to a new local high of 4055 $ before stalling out at resistance. While there very well could be one more push up to the 4100 $ area before the end of the work week, we think the short to medium-term charts are pointing to a legitimate pullback in the very near future (if not now) due to a number of technical factors which we'll discuss below hence [members-only content].
We'll take one more look at the 4-hour chart this week for a granular view of the short-term setup where we can see that price spiked up near the top of the [members-only content] zone earlier today before sellers returned to the marketplace to push price back down to the 4000 $ area which has sparked a [members-only content] bar and bearish candle formation while VST market structure turns heavier, none of which is great news for the bulls heading into the weekend. Having said that, the previous [members-only content] didn't amount to much, the EMA's continue to rise and are acting as support, all of the SMA's remain in steady uptrends, multiple levels of dynamic support are still actively building below the market, and the Ichimoku Cloud is slowly growing more bullish out in front of the market, so we don't think [members-only content] over the near-term.
Moving on to momentum and volume, notice that Willy is starting to roll over after tagging overbought territory, RSI and the Stochastic are pulling back as well on what are minor bearish divergences, MACD is close to crossing back below its zeroline which would confirm a large bearish divergence, and PPO is flashing neutral signals, all of which suggest that [members-only content] moving forward. Additionally, we are getting our first bearish volume spike in weeks and the A/D line is beginning to reverse to the downside, both confirming the near-term weakness, although the A/D line remains healthy and elevated overall and volume profile is quite healthy below the market which should help the bulls play defense as price moves lower from here.
We also want to take another look at the 3-day chart this week where we can see that price tagged the bottom of the lower supply area and the falling 50 SMA on the recent spike up to 4055 $ which appears to be too much resistance for the bulls to push through right now so a small but bearish candle formation has emerged that does not bode well for the bulls over the short-term. Neither do the falling 100 SMA, the flatlining 200 SMA, or the bearish Ichimoku Cloud, although SCMR is still printing a [members-only content] signal for now, the EMA's continue to rise and provide support, and the ascending triangle remains firmly intact (as does the A&E and the C&H), so it appears as though [members-only content] moving forward (likely limited to the [members-only content] $ area).
As far as medium-term momentum and volume are concerned, notice that Willy is very close to touching overbought territory, the Stochastic is already entering overbought territory, RSI is still stalling out in no man's land, MACD continues to hover just above its zeroline, and PPO remains neutral (on the verge of flashing sell signals), none of which suggest [members-only content] despite the possibility of near-term volatility over the coming days. Additionally, exchange volumes continue to dwindle and the A/D is currently losing some steam, both of which confirm the outlook for [members-only content], although volume profile continues to scream for a move up to the very large [members-only content] $ notch at some point over the coming months, so if the bulls can defend key levels in the mid to low-3000's $ during the upcoming period of weakness then it could be a very good Spring/Summer for the bulls (finally).
As the morning progresses the price action in the bitcoin markets is beginning to deteriorate which in conjunction with the very heavy short-term technicals tells us that its time to hunker down and wait for the storm to pass. Granted, the selloff might be short-lived and shallow given the amount of support that has built up below the market, hence our new VST ProTrade idea, although considering the still elevated risks of a more substantial breakdown we'll keep sizing small and risk tight until more directional clarity emerges.