Over the weekend, an rejection stifled a rally as the bitcoin marketplace was shoved into a group of overhanging resistance. This band of immunity has been mentioned several times in our analyses as it has proven impossible to overcome for now:
Figure 1: BTC-USD, Daily Candles, Failed Breakout
This run to the 4,000s coincided with a breakout of a large symmetrical triangle consolidation shown above. It managed to establish a new, local high but was refused on spread and high volume.
This rejection shouldn’t be underestimated as it represents a consolidation that was failed. Patterns that see 100% retracements to the point and split out are signs of a strong market change. It would be a reversal of our local uptrend.
This rally probably means we’ll be seeing the low $ 3,000 s to test support/demand once again and represents a failure to violate our bearish market structure. Sitting just below our market low is a powerful service level that could see a test if the need is weak:
Figure 2: BTC-USD, Weekly Candles, Macro Support Level
A test of this zone between $2,900 and $3,100 almost seems inevitable, given the amount of failed rallies and constant supply surfacing in the low $4,000s. But if we can continue the uptrend, the milestone we must keep a look out for is a daily close above the $4,250 level shown in Figure 1. The first will be represented by A close above that level higher high since we bottomed at $3,100.
For now, the market structure remains bearish as we continue the trend of lower highs. The rallies are becoming weaker and the supply is currently drowning the remaining demand toward the top of the trading range:
Figure 3: BTC-USD, Daily Candles, Higher Volume Rejections
When looking at the health of these rallies, it becomes evident that the attempts vs. results of the rallies are lopsided. We see a high amount of work by the bulls to move the price and a low amount of work to wipe out days’ worth of progress.
As the market tests the strength of this demand, if we can retest the bottom of the trading range, we’ll gather more evidence. For the time being, it appears the bulls are currently running out of steam. As stated earlier, if we manage to continue the uptrend, keep an eye out for the $4,250 level, as a close above it will show a break in the market structure.
- Over the weekend, a strong round of selling wiped out a week and a half’s worth of purchasing pressure.
- Bullish pressure seems to be waning as each tried rally is quickly dispatched by strong nominal pressure.
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This article originally appeared on Bitcoin Magazine.