Market Overview: Bitcoin
Bitcoin‘s May bullish candle, emerging after April’s retracement, reaffirms the resilience of the upward trend despite earlier failures to surpass all-time highs. However, the long upper wick of the May candle reveals a rejection of higher prices near the March close, suggesting a potential struggle for bulls to maintain control at elevated levels.
The ability of bulls who entered at the March highs to exit at breakeven underscores the bears’ inability to trap them in losing long positions. Furthermore, the willingness of bulls to buy the April dip demonstrates their confidence in the market’s capacity to rebound from pullbacks. These factors, combined with the rejection of lower prices, paint a picture of limited downside risk, potentially attracting further buying interest on any future dips.
This backdrop sets the stage for the current weekly battle. While the bullish momentum from the 20-week EMA has lost some steam, resulting in sideways consolidation, the broader monthly context suggests that the current price action might be a temporary pause rather than a bear trend reversal.
Bitcoin
The Monthly chart of Bitcoin
The bullish May candle, following April’s bear bar, confirms a continuation of the prior uptrend despite the failure to consolidate above all-time highs.
This bull bar, however, comes with a long upper wick, hinting at a rejection of higher prices near the March close. This suggests bulls who entered at those March highs were able to exit at breakeven, highlighting an inability for bears to trap them into losing long positions. Furthermore, the willingness of bulls to buy April’s dip demonstrates confidence in the market’s ability to rebound from pullbacks.
The confluence of these factors—bulls profiting from pullbacks and not being trapped into losing long positions—strongly indicates limited downside risk. This is likely to incentivize bullish buying on any further dips, particularly around the psychologically significant $50,000 mark or the 20-month exponential moving average (EMA).
For swing traders, patience may be key. Entering now could mean buying at the top of the current swing. Instead, waiting for a bull flag pattern or a period of sideways consolidation might offer a more attractive entry point for a potential second leg up. Even if a deep retracement occurs, an eventual retest of the current highs seems probable.
Bears, aiming for a double top or a bearish “Low 2” pattern, are likely to scalp profits quickly due to the perceived limited downside. The 20-EMA, $60,000, and $50,000 could all act as support and potential profit-taking zones.
Ultimately, the current market structure may favor bulls, particularly those willing to buy on dips or during a second pullback.
The Weekly chart of Bitcoin
Bitcoin’s weekly chart continues to depict a struggle between bulls and bears as it forms a bearish doji this week. While bulls successfully reversed up from a double bottom and a wedge bottom at the 20-week EMA, their momentum has waned, leading to a sideways movement that could precede a second leg sideways to up.
The presence of a 4-bull micro channel is notable, but only one bar exhibits a strong bullish close near its high. The remaining bars include one bearish candle and three dojis, indicating a lack of decisive momentum in bull direction. Furthermore, the price action within the bull flag suggests a limit order environment, where traders are more likely to fade strong bullish setups near the top of the flag and bearish setups near the bottom.
This subdued price action echoes last week’s analysis, which highlighted the market’s hesitation following the failure to break above the prior all-time high. While bulls who entered at the 20-week EMA or above the bull reversal bar remain in a favorable position, the absence of a decisive breakout has injected uncertainty into the market.
The current week’s bearish doji, while not overly bearish, does raise questions about the immediate continuation of the uptrend. Bulls may be wise to exercise caution and consider trailing their stop losses higher only if a strong bullish bar emerges in the coming weeks.
Bears, on the other hand, may find solace in the market’s sideways behavior. Each additional sideways bar helps to balance the odds, potentially weakening the bullish momentum that originated from the 20-week EMA bounce.
We encourage you to share your thoughts and insights in the comment section below. Engage in discussions with fellow traders, exchange ideas, and collaborate on analyzing the evolving Bitcoin landscape. We wish you a successful and profitable week ahead!
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