TL;DR still within the channel, still awaiting instructions…

Despite some significant moves over the last few weeks, not least the push from $3,700 to $3,850 that took place on Tuesday and the red candle we saw yesterday, bitcoin is still stuck in its range. Consequently the trend remains unclear and expectations of what the next move might be with it.

To recap: bitcoin has still not made a higher high, which could indicate that the downtrend was over. To date, every major peak has been below the level of the last one. The brief push to $4,190 (Bitstamp) almost qualified, but was ultimately only a ‘fakeout’.

At the same time, we have not yet revisited the lows of the end of last year, when bitcoin dropped to $3,100. BTC made a higher low of $3,322 at the end of January. This level also broadly coincides with the current position of the 200-week moving average, which was the point at which bitcoin bounced from its low in December.

Right now, we are in a sideways holding pattern, with the range tightening. The effect is like a spring coiling. If BTC moves above $4,200, we can expect further moves higher – though this would only be the first sign that the bear market was over. Bitcoin needs to move well above this level and consolidate above $4,200 for this scenario to be valid. Conversely, we’d need a decisive move below around $3,500 to indicate to the market that support was not going to hold and that another leg lower was incoming – at which point we’d take interest in the $3,300 and $3,100 levels.

For now, volumes are relatively low. Traders are cautious, and under such conditions it’s easy for bots and large traders to push the market one way or another. We have seen that multiple times, shown on the chart by candles with long wicks up or down, and by the characteristic ‘Bart’ pattern.

By our reckoning, this impasse should resolve by the end of the month, or by the end of April at the very latest (when sloping support and resistance lines meet), though a move outside these bounds could occur at any time.

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