You can see that I have the three most recent candles circled on the chart. That's because (if today closes near the highs of the current candle) it will fulfill a pattern known as the "three white soldiers." The pattern is typically generated on a low in the market (not saying this is the bottom) and it has three large bodies that have relatively small wicks. This pattern reflects an immediate and sustained reversal in investor sentiment. That narrative makes sense, since the market was so close to $3000. I think sentiment had changed at that point, and investors saw value in the crypto space. However, we still have the top of the to deal with. Interestingly, the pattern can produce a red day after the third candle in the pattern (today's candle) and then resume a powerful move to the upside. Such a move would cause a breakout above this that we are in, and a test of the 50 .
Personally, I am really interested in seeing a test of the 50 . That's the REAL test right now. If BTC can get above the 50, and hold it as support, we could go much higher. Particularly, we could see a rally up into the "major overhead ." So, from a market psychology standpoint, we all know that we had a major breakdown from the 6000-5775 level. However, the market never really returned to test and confirm that area as resistance. If you remember from my previous analysis on that breakdown, I gave you the first , which I have up on the chart right now. We did form a under the resistance, but we never physically touched it and tested it. The market just formed a below it and dumped. So, if this thing picks up steam, we could definitely see a test of the 5775 level.
Would that mean that the bear market is over? Absolutely not. In fact, if we rallied to 5775, and got rejected at it, that would be an extremely indicator, most likely leading to a subsequent fall below 3000. So, for now, the short-term bias is to the upside, until we reach the top of this small . Ideally, today's candle would rally all the way up to the top of the , near 4000. If it closed near that high, that would be perfect for the pattern. Then, we could see a slight pull back, followed by a possible breakout above the channel (shown in arrows.) If/when we see a rejection at the top of the , we should pay very close attention, because the market could continue lower, returning to the bottom of the channel. However, I think the temporary shift in market sentiment is clear.
Remember, I gave you the pattern, at the exact bottom of this move. Now, it's turning into . Another quintessential pattern, that could be a tell-tale sign that a breakout above the may be imminent. Furthermore, we have seen two successive divergences on the . The current divergence is just now starting to expand to the upside. So, in my opinion, the short term indicators show that the market could be gearing up for a more significant move to the upside.
Happy Holidays Everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
I think MPC was saying $1500 to $1000 a few posts back