Bitcoin: Rationally Assessing the Market 1D (May 21)

X Force Global Analysis:


In this analysis, we rationally assess Bitcoin's daily chart, from a perspective that is neither bullish nor bearish. Simply going through all the bullish and bearish evidence we spot, to discover scenarios with the highest probabilities.

Bullish Evidence

- The ascending trend line support, marked in the dotted orange line, demonstrates that we are still in a technical uptrend
- Prices have continued to create higher lows, and this has not been negated yet
- We have also found strong support above the 0.786 Fibonacci support
- The 20 Simple Moving Average (SMA) serves as strong support as well, holding prices on the daily
- The Exponential Moving Average (EMA) Ribbon shows strong support down to the 0.618 Fibonacci level
- While the Moving Average Convergence DIvergence (MACD) has formed a death cross, the bearish momentum is not as strong

Bearish Evidence

- While there are strong evidence for a bullish scenario, there are equally, if not more, evidence for the bearish side as well
- We can spot that the Bollinger Bands are narrowing. This usually happens before a significant move up or down.
- Considering that the trend has been rejected at 10K resistance several times, this move is likely to be a bearish move
- The Relative Strength Index (RSI) shows a clear downtrend after prices having peaked, forming lower highs
- Prices have started to form lower highs as well
- From a macro perspective, it could be said that we still have one more bearish drop before rallying to test all time highs
- A break and close above 10K was absolutely essential for a bullish confirmation, but bulls have failed to do so
- This adds weight to the evidence that the sideways movement from 9.5k-10K was merely a phase of distribution, according to Wyckoffian logic

Market Sentiment:

Long short ratios are at 66 to 34, with still significantly more long positions than shorts. The market is overly bullish despite the lack of confirmation provided for a bullish rally.

What We Believe

As we have been for the past few weeks, we remain cautiously bearish on the market, as there has been no confirmation provided for a bullish scenario yet. The market is not as severely overextended and overbought as it was a few weeks ago, but it's important to understand that technicals demonstrate a high probability for a further correction.

Trade Safe.