Bitcoin (BTC) has rallied past the 21 Day EMA which is normally considered a strong sign of a trend reversal, even if temporary. However, the bulls and bears are still confused and there is no clear direction yet. If we look at the daily chart for BTCUSDShorts, we can see that the number of shorts fell drastically yesterday as it broke below the 21 Day EMA support. Yesterday’s candle did close below the 21 Day EMA which would normally have seen the momentum shift to the downside and the bears would be running scared. However, this time they seem to want to put up a fight. The number of shorts has risen again for the day and is now once again retesting the 21 Day EMA which has now become a resistance.

RSI for BTCUSDShorts is in overbought territory on the daily time frame. This means that it is only a matter of time before the number of shorts starts falling like a house of cards. However, the whales being aware of this are not going to allow the bears to lose their confidence just yet. They are going to give them a few more signs of hope to think that the price could still fall again to make a new yearly low. The short squeeze that we have long been anticipating has not yet occurred. It will occur but not when everybody thinks the market is about to recover. The bears are still feeling confident that this might be a false rally and the whales are going to do what they can to strengthen that belief.

Meanwhile, the bulls are too scared to believe this is actually a trend reversal. The weekly chart for BTCUSDLongs shows that the number of longs is down more than 10% for the week. This is a strong indicator that the bulls are afraid to step in. Those that are in the market at this stage are very eager to take quick profits and do not seem to believe that this might be the end of the correction. The weekly chart for BTCUSDLongs also shows that the ascending channel is intact so far and the bulls still have a shot at pushing for a trend reversal at this point. It is likely that we may see the bullish momentum follow through till mid-2019 but the RSI would soon be in overbought territory after a few rallies.

The 21 Week EMA is acting as a strong support for BTCUSDLongs and as long as the number of longs stays above this level, we will be more inclined to believe that a correction to the upside is going to follow in the weeks to come. The price of Bitcoin (BTC) bounced straight off its 200 Week MA and did not test the 2900 level that most bears have been waiting for. It is thus possible that we may see a retest of that level in early 2019. However, the momentum has shifted in favor of the bulls for the time being and it is only a matter of time before the bears give up and the bulls start charging with confidence.