Market overview
In this week’s Bitcoin report, we delve into the evolving market dynamics as Bitcoin navigates a critical juncture. The weekly chart showcases a potential shift in short-term momentum, as bearish signals emerge amidst a broader bullish structure. We maintain a cautious outlook for the coming weeks, anticipating sideways to downward trading unless a bullish reversal occurs.
The daily chart reveals a consistent downward trend, with bears asserting control. Traders are advised to exercise caution, as the market currently resides in the unpredictable midpoint of a trading range. We explore the possibility of an expansion or contraction patterns and discuss the challenges traders face in this environment.
As we approach the monthly chart’s close, the market teeters on the edge of forming a low 2 pattern. This potential development, coupled with the buy climax possibility, could signal market opportunities. In the next report, we will delve into the long-term implications of these patterns and provide a comprehensive analysis of the second quarter’s performance.
Bitcoin
The Weekly chart of Bitcoin
The Bitcoin weekly chart paints a picture of a market consolidating after a prolonged bullish rally. This week’s bearish candlestick, a follow-through from the previous week’s bearish signal bar, strength the potential shift in short-term momentum thesis. Despite the prevailing medium and long-term bullish structure, this bearish move suggests growing influence from bears. We maintain our expectation of sideways to downward trading in the coming weeks, barring a strong bull bar.
The repeated rejection from the $70,000 mark reinforces this level as significant resistance. The phenomenon of repeated attempts followed by a reversal is rooted in the psychology of market participants. After a 2 or 3 unsuccessful attempts to push the price in a desired direction, traders may start to doubt their initial conviction. This self-doubt, combined with the realization that their strategy isn’t working, can trigger a cascade of traders that abandon their original positions and potentially even adopt the opposite stance: The market’s inability to break through this ceiling for the third time could prompt traders to shift their focus towards the $60,000 support level and the 20-week EMA (exponential moving average).
Bears who sold the $70,000 resistance are likely aiming for the $40,000 level, though achieving this target may require substantial momentum. For long-term bulls, this potential dip could present a buying opportunity, as the underlying bullish market structure suggests limited downside risk.
Overall, the current context remains unchanged. We anticipate that bearish movements will eventually lose steam, creating opportunities for long-term buyers who can cost average. Weekly bulls should remain comfortable even if the price ends up testing the $40,000 support. Before that happens, there are the $60000 and $50000 breakthroughs.
The Daily chart of Bitcoin
The Bitcoin daily chart reveals a consistent downward momentum this week, with each day closing below the previous day’s close. This indicates bears are in control, despite the presence of tails on the bars.
Traders recognize the current price level as the midpoint of a trading range, known for its unpredictability and therefore not recommended for trading. Should the price continue its descent, bulls may attempt to buy at the lower third of the range. However, a reversal pattern is crucial before entering such positions, as the trading range has already extended for more than five legs, increasing the likelihood of either a further extension or a contraction pattern, like a long tight range, or a triangle.
Given these factors, trading this chart currently poses significant challenges, and traders should exercise caution. The evolving dynamics between bulls and bears will determine whether the market experiences a breakout, extension, or contraction in the coming weeks.
We encourage you to share your thoughts and opinions on this analysis in the comments section below. Do you agree with our assessment? What are your expectations for Bitcoin’s price action in the coming weeks? Let’s discuss and learn from each other’s perspectives. Please share this analysis with your fellow traders to spread the knowledge and foster a more profound understanding of Bitcoin’s price movements.
Market analysis reports archive
You can access all the weekend reports on the Market Analysis page.
