The market got a very good rebound from the critical area around $3400 to the level of $3450. The falling wedge we have formed over the past few weeks was broken by the bulls.
As I mentioned in my previous article, the most likely scenario was to break the support level of $3350 and then go down, but the bulls break the resistance level and continue upward.
My Analysis:
- I still think the bearish scenario is more likely to happen than the bullish one. As you can see the chart above we can form, something like a bull trap before (red circles).
- On the daily chart, we can see how we forming lower high after the lower high that technically is bad.
- If we look at the daily EMA ribbon, we can see how many time we got a rejection before that and right now at this level we got rejection one more time. So if we want to continue to the upside we have to break this EMA ribbon. If that happens we will have a bull flag and we will reach 3900 to 4000$ level.
Final Thoughts
It’s possible to see both scenarios in the next couple of days. If the bulls get momentum, they will break the resistance around 3700$ level and the price will take to the upside (3900$ level), there will be next resistance that the bulls have to break if they want to continue above 4000$ level.
If the price continues to consolidation, the bull flag can transform into a bar pattern and we can see significantly drop to the downside. It would be great if we see a move to the upside in next 24 – 48 hours because if that didn’t happen I think more possible is to see a forming a bar pattern and drop to the downside.
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