The bears have certainly been taking advantage of their renewed strength over the past 24 hours considering the 5500 $ area that we spoke at length about yesterday was broken quite quickly and easily which led to another cascade lower into the 5300's $ where some VST support emerged. The bears then took a breather which allowed the bulls to push price up to 5600 $ where sellers returned for another leg to the downside, ultimately reaching a new cycle low of 5199 $ only a few hours ago. Now the bears are once again pausing to get some air so price has bounced back up into the 5400's $ where the action has turned consolidative over the near-term as the market prepares for the BCH hard fork. On that note, while we think the BCH fiasco has acted as a catalyst to the current selloff, we don't think it will continue to sustainably impact the BTC price going forward which means the technicals will once again dominate the market (hence [members-only content] is likely, unfortunately).
First up is the 4-hour chart where we can see that the selloff over the past 24 hours has consisted of [members-only content] signals on bearish but spikey candle formations while market structure is still broken on all timeframes, all of which continue to favor the bears, however the move off of the 5199 $ lows has sparked a new demand area that could keep price range bound between [members-only content] $ over the course of the next few days. That said, all of the moving averages are picking up steam to the downside, multiple levels of dynamic resistance continue to build overhead, and the Ichimoku Cloud is still quickly moving lower, so the bearish bias is certainly still intact meaning we don't think [members-only content] despite what has so far been a rather nice countertrend bounce.
Moving on to momentum and volume, its clear that the market got extended to the downside on a near-term basis considering Willy, RSI, and the Stochastic are all still in officially oversold territory, MACD had a massive washout from which it is just starting to bounce, and PPO is flashing strong buy signals right now, all suggesting that the current selling respite likely has some legs. This outlook is being confirmed by the A/D line which has bounce quite nicely off of the lows and the volume profile setup which is showing a large notch between [members-only content] $, both of which should help the bulls moving forward, however exchange volumes are still firmly bearish hence any upward move we think will be countertrend in nature. Granted, a run-up to or above [members-only content] $ is possible (albeit not likely) at some point in the not too distant future given the still very oversold technicals, which would align with the 2014 fractal that many are now discussing, although we expect more selling to [members-only content] once again within a week regardless of what materializes near-term.
Next, we'll look at the 3-day chart where we can see that the breakdown yesterday sparked a [members-only content] signal on a bearish candle formation which was also a [members-only content] from a few weeks ago that took out the longer-term trendline and broke market structure on all timeframes, none of which bodes well for the bulls moving forward. Neither does the [members-only content] signal that is currently printing on the new 3-day candle, the EMA's which are beginning to stack to the downside, the fact that the 50 SMA has now officially crossed below the 200 (death cross), the strong dynamic resistance that continues to actively build overhead, or the Ichimoku Cloud which is growing more bearish out in front of the market, so [members-only content]. That said, there is a small longer-term demand area around current levels which supports the idea of a relatively brief consolidation here in the 5000's $ before volatility truly picks up again.
As far as momentum and volume are concerned, notice that Willy, RSI, and the Stochastic have all made progress to the downside over the past few days but there is still some room to run lower before being fully recharged, MACD has emerged below its zeroline for the first time since August, and PPO remains neutral, none of which will help the bulls much over the coming days (and likely weeks). Additionally, exchange volumes have turned bearish again and are starting to pick up a bit, the A/D line is taking its first noticeable downtick in almost three months, and the volume profile notch around [members-only content] $ that we have been watching for months now has yet to fill-in at all which will likely act as another downside magnet moving forward. While overall it is clear that the bias remains firmly to the downside hence we are expecting another leg lower into the [members-only content] $ (at least) before all is said and done, we cannot rule out a countertrend move back to the [members-only content] $ region before new lows materialize given what the short-term technicals and historical data seem to indicate which is why we want to stay firmly neutral until further notice.
Well, the BCH war has now officially begun which has sparked a small uptick in volatility in the BTC markets, and we expect this random, range-bound volatilty to persist throughout the day as traders continue to keep a close eye on developments on the BCH front (particularly related to hashrate). While there is no doubt that the bears are in full control of where the market heads over the coming weeks and months, like we mentioned earlier we think the bears could use more of a breather before getting active again so we think the market continues to trade between [members-only content] $ at least over the next day or two (with a spike up to the [members-only content] $ region possible before the downtrend resumes).