Bitcoin Bearish Outlook Remains Unchanged

Bitcoin has once again shot past $6k after it led traders into thinking that it was ready to nosedive below it. That false impression led to many traders opening aggressive shorts which created a honey pot for the market makers and the whales above $6k which they have now fully exploited. While it may seem bullish for the price to bounce back above the important psychological S/R level of $6k, it is important to note that it still remains in a bear trend. As long as it remains below the 200-moving average on the 4H time frame, there is no reason to think that BTC/USD is about to begin a new uptrend.

Quite the contrary, we could now be looking at the price forming the right shoulder and then completing a H&S formation to decline much lower potentially in the first week of next month. It is important to realize that the longer a trend takes to develop, the more reliable and sustainable it is. Abrupt moves like these do little to change that established trend unless there is follow through. The recent move could see BTC/USD fill the CME Futures gap that was left there over the weekend when the price declined. However, if it is filled, it will make it difficult for the price to rebound again after it declines to $3k or lower. The reason is simple: $6.6k is approachable, but $8.4k (where the next gap is) might be hard to retest.

If the price declines with this gap still being there at $6.6k, the probability of the price climbing above $6k after the next decline this year becomes a lot higher compared to if the gap is already filled. The bulls should hope that this gap is not filled. As for the bears, the stakes are too high and the big players are not going to let them short the market this easy. We can already see that the S&P 500 E-Mini Futures (ES!) has started the day in green but this is all short-lived. A much clearer picture of what may be about to happen is pained by WTI Crude OIL (USOIL). It is ready to plunge below $20 per barrel for the first time since 2002 which is a major development. All of these factors point to an imminent decline in the cryptocurrency market in the days and weeks ahead.