Bitcoin - Bear market rally top?

Over the past few weeks, worsening economic data led to widespread speculation about the FED backtracking on its promises, leading to buying spree fueled mainly by retail investors calling for the market bottom and trend reversal. Despite mounting bullish calls, we stuck to a bearish outlook for the medium-term and long-term while pointing to a bear market rally in the short-term.

Recently, technical indicators started to show severe signs of exhaustion, with shallow volume accompanying new highs. This development suggests fewer market participants are willing to buy at current high prices, which is an ominous warning sign. Each breakout above the resistance at 24 280 USD was quickly invalidated. Additionally, RSI, MACD, and Stochastic are overbought on the daily time frame, potentially suggesting the top of the bear market rally.

As for the medium and long term, we have no reason to change our bearish outlook due to fundamental factors like higher interest rates, economic tightening, slowing global economy, and regulatory threats. Because of that, our medium-term price target is 17 500 USD, and our long-term price target is 15 000 USD.

Illustration 1.01

The picture above shows the setup we introduced (and kept updating) early in the bear market rally. Yellow arrows indicate bullish breakouts and the recent invalidation. Red arrows indicate volume declines accompanying bullish breakouts.

Technical analysis - daily time frame
RSI is overbought. MACD is flattening. Stochastic is bearish. DM+ and DM- are bullish. Overall, the daily time frame is neutral/slightly bearish.

Illustration 1.02

Many analysts argue that BTCUSD has bottomed out. However, Illustration 1.02 shows that even a bounce of such magnitude as +40% is nothing uncommon. For example, in February 2018, during the bear market rally, Bitcoin gained over 98% within a mere month.

Technical analysis - weekly time frame
RSI is flattening. MACD and Stochastic are bullish but still in the bearish zone. DM+ and DM- stay bearish. Overall, the weekly time frame is neutral.

Illustration 1.03

The picture above shows further evidence of a gradual decline in volume.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

Trade active:

We are extremely bearish on BTCUSD; for now, it seems our thesis about the top has been correct.