Bitcoin bounces 5% within 12 hours- are the bulls back?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Bitcoin has a short-term bearish outlook despite the bounce.
- A liquidity hunt to the $30.4k area can occur, but any further gains would show bulls were slowly regaining control.
Bitcoin [BTC] saw a sizeable short-term bounce from beneath the $29k level. At the time of writing the king coin was trading at $29.6k. Bitcoin traders would be keen to see if this recent move would continue higher. If Bitcoin can climb above $30.4k and reclaim $30.6k as support, it would reinforce the idea that BTC was headed toward $31.5k.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Still, Bitcoin has been bullish in 2023. It would need to drop below $24.8k for this weekly timeframe bias to flip bearishly.
The H4 Bitcoin bearish order block was tagged, further losses seem likely
The $29.7k region was a lower timeframe consolidation zone and had a bearish order block on the 4-hour chart. After the recent bounce from $28.8k in the past 24 hours, the market structure was on the verge of being flipped bullish. The RSI climbed past neutral 50, and the CMF showed significant capital inflow during the bounce.
Yet this does not show bullish sentiment was back in the market. We might not be starting a reversal, because there were liquidity pools at the $29.7k and the $30.3k regions that could attract BTC prices. After a retest of these zones, BTC could be ready to move downward.
The structure was bearish on the 1-day chart after the drop to $29k on 24 July. Therefore, despite the lower timeframe bounce, traders can look to add size to short positions. Alternatively, a safer route for traders already in a short position would be to wait for prices to reach invalidation or continue bearishly without adding to the position.
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The Open Interest showed the recent bounce convinced some speculators to bid
On 31 July, the price of Bitcoin began to descend slowly from $29.4k to reach $28.8k on 1 August. During this time, the Open Interest was on an uptrend. This was a sign of strong bearish sentiment and noted short positions were opened as prices continued to descend. A drop in OI accompanied the bounce in BTC prices late on 1 August.
This began to change over the past 12 hours as the OI saw some gains. Meanwhile, the spot CVD continued to trend downward. Taken together, it showed that a good chunk of the market participants remained bearish on the lower timeframes.