What interesting observation can we take away from the situation of the market over the past week? That there was one attempt to continue the fall and one attempt to grow. Both of these were unsuccessful. And all this happened over a short period of time.
What happened during these 18 hours, which were the most active throughout the week?
On 27 February, sellers decided that after a short stop which began on February 24, the fall should continue, and they actively began to increase their marginal positions with market orders:
However, after the formation of a flawed breakthrough and insufficient volume for a continuation of the fall, sellers began to close their positions, provoking a rollback up. At this time, buyers who saw that sellers were not able to continue to fall, also began to close their positions during the price growth:
If buyers were strong and confident, an unsuccessful attack by sellers would have been a good signal to buy. However, we saw another behavior of buyers, as a result of which the price of $4,000 stood and to this day continues a consolidation without volumes in the range of $3,820–4,000.
Whereas after a sharp fall on 24 February, for a whole week, we did not see any hint or desire of buyers to continue to grow. So, our opinion remains unchanged; we continue to expect a fall and we regard the current consolidation as a temporary stop. Our next target is a price zone of $3,660–3,700. Within 4 months from this price zone, the price pushed back or at least suspended for at least a week:
Therefore, this price zone will be a good indicator of whether there is enough strength left by sellers and if there is a good chance for buyers to change the local trend and try again to break through to fix above the price zone of $4,250–4,300. If sellers manage to break through this price zone then the critical point for buyers will be $3,500–3,550. If buyers can not keep this price zone, then we expect a global continuation of the fall and a possible low upgrade, at best, up to $3,100.
But after 4 months of consolidation, we think that with this option, the fall may be more powerful.
For such a scenario, in the beginning, there is a need to break $3,660–3,700. Therefore, we will closely monitor critical points in order to properly assess the likely prospect of price movement.
At the moment we are waiting for a change in the balance of power in the market. If this change occurs, then the critical point will be $4,250–4,300, after its breaking through we see the targets $4,575, $4,900, and $5,300:
Globally, during the week, marginal positions of buyers decreased:
Sellers positions are in consolidation:
The past week has the smallest volumes since 5 November:
Whatever happens later, while the price is lower than $4,250–4,300, sellers control the situation on the market. In order to change the trend in the market, the volumes and active buyers should appear. In the meantime, for 4 months, the consolidation is in the range of 30%.
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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: Bitcoin News