Christmas is over, feasting is done and it is time to get back to business. What is the current state on the Bitcoin market? Can we expect a years end rally or will we just slowly glide over to the next?

I hope you all enjoyed the holidays and used the last days to recharge your batteries, spent hours with friends and family and had a good chunk of delicious food.

Never under estimate the power of some good rest. It helps you clearing your mind, opening up for new ideas and allows you to create some distance between you and your daily challenges.

Many of my best ideas within the last year occurred in times of leisure and made me excited for coming back to work. I could not wait to bring those ideas to life and into action. A certain amount of free time should always be part of your schedule.

Weekly

The weekly time frame created a nice pivot candle with an engulfing candle, by making up the losses from the week before and even closing higher.

While the market structure is also still intact and the most recent close could mark down a new local higher low, which would be a sign bullish price action. To underpin this idea I would like to see a weekly close above last weeks low. So above $45.600. Meaning we could also close this week with a red candle, as long as it is above the low of the previous one.

Other findings that are supporting the idea, are:

• Bull Divergence on FSR and RSI (see chart below)

• Engulfing Candle

• Pivot Candle (Blue)

All these are indicators that we could be close to a reversal on the high time frame and looking to higher price in January. If we should break below most recent lows on the weekly the correction might not be over yet and we could see even lower prices. Whereas, the lower $40.000 range for Bitcoin might be a target. Breaking even lower would break the weekly market structure and I would start to lean to a more bearish outlook the upcoming months. But, we are looking at the markets step by step and we will deal with it once it happens. Before, our high time frame bias should remain bullish for the general outlook on Bitcoin.

Daily

Over the last couple of days we saw a break of the falling wedge, as mentioned in the last update, a good pattern for a potential reversal or relief rally. At the moment it looks like the latter became true. After several days of bullish price action, the price topped right above the 200 EMA and below the horizontal resistance of former tops marking the beginning of the wedge. During the Christmas holidays price action almost got to a halt. Only to be dumped right yesterday.

The loss in volume and lack of euphoria by bulls over winning the 200 EMA brought the bears back on track. That lead to the pivot short and the price dump (orange candle on chart).

By looking on the daily time fram, my general bias remains bearish for the moment. As you can see on the bottom indicator, we are still in the red zone. So I am currently not looking for any trades on the long side. As Bitcoin is a hyper-bullish assets over the last year, I am not looking for shorts either on this time frame. For this I would go down to the 4-hour or to an even lower time frame. To catch some short term swings or scalps.

That being said, I expect for the upcoming days the price to test lows of the wedge (~$46k) or even a test on the region between $44-42k, before we could observe a reversal or retest of the 200EMA on the daily.

Four-Hour

Currently the most interesting time frame for me. The higher time frames are not clearly trending in any direction yet again. But the break of the wedge formation brought us a relive rally over the last couple of days. This rally topped right below the 200 EMA on the 4-hour. Price tested the resistance several time before it finally closed above the 200 EMA, only to lose the level again in the next candle. A clear failure pattern, combined with bearish divergence on the RSI and FSR. Ultimately leading into latest price drops down to the higher $46k region.

On the way down we can observe how the price stopped at the demand zone around $49k and bulls tried to buy up the orders for several candled, only to be overwhelmed by bears and the level was lost. Since then, the price tested demand around $46.600. So far order got eaten up quickly by bulls. This could be a good signs for some strength and that price reached a low for the moment.

In the end, we are still ranging between supply and demand and we are still below 200 EMA. Meaning bears are still in charge and bulls need to fight for each level. Getting above the 200 EMA would change the tone and would put some pressure on the bears. Until then, I remain bearish and would rather look for short positions on situations of exhaustion, like for example the loss of the 200 EMA combined with a bearish divergence.

#TLDR - Summary

Our high time frame look on Bitcoin remains unchanged, we are in a bullish market structure and currently undergoing a healthy reversal in price action. As long as the price stays above the $40.000 on weekly close this picture is not endangered. Closing above $45.600 would be ideal for a local low.

The daily bias on Bitcoin on the other hand currently remains bearish, although the falling wedge was broken to the upside and the bearish divergences played out. The rally remained weak and did not last long. It currently seems price is going at least a little bit lower before we could expect another try for a reversal. $44k might be a region for that.

The lower time frames are currently those where the most action is taking place. We experienced the rally and a significant fail of it leading to the most recent test of the demand zone around $46.500 for Bitcoin. A bottom here is not confirmed yet and a break of the zone not off the table.

As long as my bias remains bearish, I am looking for shorts. But I have in mind that we are most likely close to a bottom and currently only need patience before we can experience more bullish price action.

This is it for this week. As we are currently between the years and many people are on holidays price action might be a bit misleading as the volume is lower during this season. Stay tuned and safe out there.