ScottMelker

When in doubt, zoom out. There are countless ways to define a bull or bear market, and each technical analysis seemingly has their own approach. That said, the most typical definition of a bull trend is an unbroken series of higher highs and higher lows. Bitcoin has been in an uptrend since bottoming after FTX. The recent 80K low “could” be another higher low in this series. It would technically be confirmed with the next higher high - a new ATH.

Not much is happening on the Bitcoin chart, but it is worth noting that descending resistance is in line with the 50 MA on the daily, a key level that traders and algorithms will be watching as resistance. A strong push through that level could be a great signal that the bottom is in.

itcoin continues to struggle to find a clear direction. The weekly 50 MA is still around 102K - even if we are in a bear market, that should be retested as resistance, like it has in every past “cycle.” For now, I remain in the camp that we are likely in a normal bull market correction and that we will eventually see further upside. In the short term, we can use this chart as a guide for a break up or break down. Right now, we remain sideways.

I have shared horizontal levels of resistance and support countless times. I thought I would quickly share the diagonals. Very simple - we have descending resistance and rising support that could give us clues to where price heads next. Set an alarm on both and go about your life.

Technical analysis is just a way to make a slightly more informed educated guess and to manage risk. That said, my base case has been that the low was around 80K - at least for a while. Even if we are entering a bear market (I don’t think so), the 50 MA on the weekly should be tested as resistance, as it always has been in the past. That means we should see price rising to the $102K area before getting more definitive information. That’s what I am looking for at the moment. Educated guess. The weekly looks promising.

There is no denying the fact that Bitcoin look exceptionally weak. There was widespread optimism when price bounced 10%+ off of the lows that the bottom was in. When price was 92K, sentiment was that the correciton was over and price was going straight to 120K. At 84K, sentiment is in the dumps and people seem to believe price is going to 50K. Humans are going to human. On the optimistic side, we hit oversold across the board and now have a very strong chance of meaningful bullish divergence with RSI on the daily chart. A close below $84.684 would give a lower low and price, with a potential higher low on RSI. As long as that higher low eventually holds, this looks likely to be bottoming. We would need to see RSI make a clear elbow up. That is a lot of “ifs!” Be careful.

Friday’s candle had a long wick down on the highest volume we have seen in the entire sell off. This is usually a sign of a local bottom at the very least, as sellers give one last attempt to push price down and buyers step in, preventing price from advancing further below. Sunday’s candle was bullish, giving more confidence that price may be bottoming in this area. Remember - bottoming is a process. Another push down would likely give us bullish divergence with heavily oversold conditions and a true bottom signal. I still believe this is a correction in a generally bullish Bitcoin market and that we will push back up, at least to the low 100Ks to test the weekly 50 MA as resistance.

Bitcoin finally retraced to my biggest area of bids, spread around $88,000. I have been talking about this level since April, when it was broken to the upside. I tweeted about it repeatedly over that period. Did I know it would happen? Absolutely not. That is why I dollar cost average as well. But it did look like a glaring level to buy if we got another major correction. You may remember that I viewed $74K in the same manner when price was above $100,000 the first time. These were simply 2 major levels of resistance (in my mind) that were likely to be retested as support… and you can’t know a major level is support unless you test it. This bounce could be technical, as we have seen oversold conditions with bullish divergence on almost every time frame. I still feel like Bitcoin is in the process of bottoming here and that is most likely just another 30% correction in an uptrend. I am bidding 74K again as the next area of interest, just in case.

Bitcoin saw 4 consecutive candles wicking below support at $100,703 before the move up. This indicates strong demand around $100K. All of the bullish divergences (not shown) that I discussed last week confirmed and played out, once again showing us exactly where the bottom of this move was. There is still a ton of resistance above, but the move so far is encouraging.

We have POTENTIAL bullish divergence with oversold RSI on the 6 and 12 hour charts. A close slightly lower will also give us divs on the 4-hour. We also have potential divergence on the daily, although not quite oversold. If we bounce after these closes and see a clear lower low on price and higher low on RSI, then the bottom is statistically very likely to be close.