After the weekly candle closed practically at the same price as the start of the trading week, the situation was not any clearer. The big shadow on a weekly candle means that so far, buyers are not strong enough to continue moving. However, sellers cannot continue to fall. All this happens on small volumes that decrease every week:

This fact suggests that the probability of consolidation continuation between price zones of USD 3,560-3,580 and USD 3,770-3,800 is increasing. The middle of this consolidation at the price of USD 3,680 also has accumulated volumes and this price also must be taken into account as a potential rebound:

That is why now is a good time for small speculators who can trade clearly from these price zones and a terrible time for emotional traders who are constantly pushed out of positions by the market, regardless which side they expect from the price movement.

The global market moves in the falling channel which is more like a consolidation but at an angle. Sellers failed to break through the middle of this channel to continue their movement. After a flawed breakdown on a smaller timeframe, volumes have increased that can inspire buyers for good and long-lasting growth:

However, I would not expect that the price without problems will pass the middle of the consolidation of USD 3,680. The fact is that between the price zone of USD 3,560-3,580 and USD 3,680, sellers have no particular desire to sell. This is a space in which the price can move sharply and this does not indicate strength or weakness of one or the other side. It can be confirmed by horizontal volumes which formed as a result of recent trades:

If we analyze the marginal positions of buyers then we do not see an active desire to buy:

During the consolidation when the price was at a stop, the buyers actively closed their positions indicating that the growth was uncertain. In such cases, a great deal of confidence among buyers will be at the very top of the consolidation, after which the price usually unfolds. While the market does not have volumes, the price will move in a limited range.

We also do not see the clarity of their intention in terms of margin positions of sellers:

According to wave analysis, wave Y continues to form which consists of three smaller waves.

At the price of USD 3,462 wave c = 0.618*a:

If buyers can break through the price range of USD 3,770-3,800, this will be a good signal to start a new wave of growth with the first target of USD 4,600 and the ultimate target of USD 5,300.

However, if sellers keep this price zone, this will mean that the correction has not yet ended and sellers will try to test a price zone of USD 3,260-3,360, after which a growth to USD 4,400 and USD 5,100 should begin:

Therefore, we continue to monitor the consolidation in the market and expect how it will behave at critical points in order to understand what scenario is unfolding. Cool heads are needed to make the right decisions and to avoid taking on the many provocations in the market, at least during this period of low volumes.

 

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About the Author: Peter Oleshchuk is a trader and technical analyst.
He has spent two years studying and analyzing the crypto market.
Image Courtesy: tradingview
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