Will Bitcoin Confirm Bearish Acceleration?
Pivotal triggers worth noting
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Bitcoin’s Downside Confirmation Trigger
Bitcoin is currently negotiating one of the most important levels on the Weekly timeframe.
The 200-week EMA continues to act as the key confirmation trigger for additional downside going forward.
Price has now produced a second consecutive Weekly Close above the 200-week EMA, while at the same time developing Higher Lows on the Weekly timeframe.
However, on the lower timeframes, Lower Highs are forming, which means this is not necessarily stability that has full confidence brewing.
That said, continued stability above the 200-week EMA remains essential if Bitcoin is to form a U-shaped reversal from here on the Weekly timeframe.
Historically, in 2022, post-breakdown relief clusters initially tagged the 200-week EMA as support via downside wicking.
Sell-side momentum began to slow, a Higher Low formed, and clustering developed.
However, that relief cluster eventually dissipated and distributed before resolving with a Weekly Close below the 200-week EMA, followed by an upside wick into it that turned the level from support into new resistance.
We are seeing shades of 2022 here.
There has been downside wicking into and below the 200-week EMA, a capitulation wick, a Higher Low, and initial slowing in sell-side momentum.
But price has failed to make any new highs.
If upside wicking occurs into the mid $70,000s or high $70,000s, it is very difficult to measure how long such an upside wick could be.
However, if that upside movement does not crystallise into sustainable candle body closes, then this attempt at stability and U-shaped reversal may not mean much in the grand scheme of things and could disappear into lower levels.
For confirmation of additional downside, the 200-week EMA will continue to be the key level.
A Weekly Close below it, followed by turning the underside into new resistance, would likely lead to additional downside.
That was also the case in 2018, where a Weekly Close below the 200-week EMA and an upside wick into it preceded Lower Lows.
This remains the confirmation trigger.
But until that Weekly Close below the 200-week EMA occurs and the underside flips into resistance, additional downside cannot be treated as confirmed right away.