After the fairly strong reversal signals above 9.7k-9.8k with 4 hr and even some 1 D RSI divergence we saw a fairly swift breakdown below 9.8k which was more bearish than I expected but not totally unexpected given the overall weakness in sentiment and volume combined with the strong resistance at 10k and the longer duration divergence indicators being signaled. Most of this recent reversal seemed to be short positions unwinding during low liquidity. Now that short positions have normalized we can expect far fewer short squeezes to bump prices higher. While bullish sentiment wasn't particularly strong, bearish sentiment also appears to have weakened as significant short positions closed during the move down suggesting profit taking on both sides took place during the most recent fall from $9800+.
Recent price action has revealed some new descending channels as well as a clear support area which we've tested now over two distinct periods. As a new descending channel has been defined we now find price moving between a tight range formed by the bottom of an ascending channel (teal/blue) and the bottom of the newer descending channel (purple) with declining volume.
a few things:
1) We're in between trends on the 1 D ADX. which tends to be a poor place to buy / sell
2) 4 hr RSI convergence signaling, which suggests another run higher is possible though a dip lower is possible but not likely to be significant, i.e. good risk/reward for going long.
3) Overall pattern could be a sym triangle though it's unclear whether this will be for a continuation down
4) Short position taking has stalled which confirms the ambivalence in the market
5) Google Search Sentiment has been generally flat or declining gradually for nearly 2 months, which could suggest that the market has bottomed out though no sentiment reversal has been triggered.
6) Strong 1 D RSI has yet to be triggered and a big move below 6k could be needed before a strong bottoming out leads to a reversal.
7) A move back to $9400 seems possible but taking shorts at that level seems wise if one has not taken one at a higher price level.
8) A reversal at the current price level around $8300 would confirm the bottom of a large ascending channel and a bounce off of another descending channel. A break above $8430 in the next few days could signal a momentum reversal and would be a buy signal given the RSI convergence signaling.