Unfortunately for the bitcoin bulls the market continues to respond well to the technicals which remain overwhelmingly bearish at this time hence it comes as no surprise that prices are moving steadily lower right now. While we continue to think that this will be the case for the foreseeable future given we have yet to establish a sustainable cycle low, we are still of the opinion that the final capitulatory washout is not far down the road meaning there is a good chance it happens before year end. When this capitulation does materialize then supply and demand will overtake the technicals and things will begin to reverse back to bullish very quickly on the near-term charts, although until then the bears are in control which likely means a breakdown below the cycle lows in the not too distant future.
Today we'll zoom out to the 3-day chart where we can see that price appears to finally be setting up for a close within the inner demand area on a red SCMR signal and small but bearish gravestone doji candle while market structure remains broken and heavy, all of which points to lower prices over short-term. Also note that the EMA's are still stacking to the downside, the 50 and 100 SMA's continue to fall while the 100 is close to crossing below the 200 soon, multiple levels of dynamic resistance continue to build overhead, and the Ichimoku Cloud remains firmly bearish above and out in front of the market, so it seems as though the bulls will need a Holiday miracle to prevent a breakdown below to new lows in the near future.
Moving on to momentum and volume, notice that the Stochastic is back in officially oversold territory and PPO continues to flash strong buy signals, both of which are fairly encouraging for the bulls from a medium-term perspective, although Willy and RSI still have some recharging to do and MACD remains weak with no signs of a divergence so shorter-term the outlook still looks fairly dire for the bulls. Having said that, the volume indications are more sanguine than the momentum oscillators considering the A/D line has been fairly steady at relatively elevated levels despite the spike in bearish exchange volume recently, and volume profile doesn't look nearly as bad as it should given the current conditions so again the bulls have something to work with longer-term even though lower prices are likely over the near-term.
At this point there is not much more we can say or do other than wait for the market to do it thing, which is likely continue to move lower until supply and demand takes over as we mentioned earlier. While this may not be what many market participants want to hear considering the amount of pain that has already been endured by long investors this year, we'll continue to reiterate that we think we are in the final innings of this bear market meaning that a sustainable bottom is not far off and there is some light at the end of the tunnel heading into 2019.
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