Bitcoin Bounce Smacked Down Into Merciless Chop Zone - Price Analysis

  • Short term trend: No trend, chop zone is real
  • Long term trend: Still no challenge to downtrend

The latest Bitcoin (BTC) bounce from the bottom of its local range has been sharply rejected by the bears, even before returning to the top of the range. Bitcoin is now back against the wall, and just hanging on to $8,000, as the downtrend pushes ever deeper on the leading crypto.

If we start on the daily chart with Volume Profile indicator, we can see a general range where most trading has taken place during the last month, roughly between $8,400 and $7,900. A powerful rally on October 20 pushed the crypto back toward the top of the range, where it managed to reach $8,350 on Bitstamp.

The local (shrinking?) rangeBTC chart by TradingView

The rejection of the rally, and a potential break higher, or even out of the local trading range was telegraphed by last night's doji candle close. We can see that out of the three main bounces, this one is the only one not to make it to the red resistance zone of the range.

This is reflected on another daily chart, where we can clearly see the 21 and 8 EMAs downtrending. Bitcoin on the 20th broke above the 8 EMA (green line), briefly trading in a range between the 21 and 8; but it was rejected multiple times at the 21, where it was also rejected from October 9-11.

Rejected at 21 EMA again, lost 8 EMABTC chart by TradingView

Thus, the range appears to be shrinking, and shrinking to the downside. Volume continues to fall overall and is now quite low, suggesting that Bitcoin will leave this consolidation area pretty soon.

Going slightly larger, to the 2-day chart, we continue to see an overall downtrend going unchallenged in the month since Bitcoin broke down from a huge consolidation above $10k.

Trend is downBTC chart by TradingView

Here, the EMAs are all still pointing down, starting to crowd the $8,000 consolidation area. The histogram has been trending back up since the breakdown, but it has been doing so while arching down. The bounce a couple days ago looked like it could start to alter that profile, but with the bounce rejected, the histogram has resumed rolling over just under the positive side of the range.

Finally, on the 4-hour timeframe, we see that the bounce’s rejection is itself bouncing, and trading here is nothing less than a murderous chop zone for all but the best traders. We did actually see a bear divergence on the histogram, telegraphing yesterday’s selloff, and the histogram is now arching back up.

Maybe another tiny bounceBTC chart by TradingView

This low is a bit higher than the last one, which is consistent with an overall slight uptrend for the structure’s support. What was looking like a parallel structure now is looking more like a triangle structure, which also speaks to the thesis of a looming breakout.

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