Josh's Market Evaluation: A Shift Towards Short-Term Bullish Relief within a Larger Bearish Trend
In this update, Josh observes a notable shift in the short-term outlook for Bitcoin, marked by the confirmation of a new bullish divergence on the 2-hour chart. This signals a potential for brief bullish relief or choppy sideways price action over the next 1-2 days. This is a significant development compared to the previous analysis, which leaned heavily into a bearish outlook with only minor bounces expected. The US stock market, specifically the S&P 500, is also showing a short-term bounce from a key support level, mirroring the sentiment in crypto and providing some assistance to Bitcoin's immediate upward potential. However, Josh strongly emphasizes that these are short-term moves within a much larger, multi-month bearish trend, and the long-term bearish divergence on the weekly Bitcoin chart remains in play. Altcoins, as indicated by Bitcoin dominance trading sideways, are expected to largely follow Bitcoin's lead, suggesting potential for similar short-term relief.
Key Points and Main Topics Discussed
- Bitcoin's Short-Term Bullish Divergence: The most significant new development is the confirmation of a bullish divergence on Bitcoin's 2-hour chart. This is characterized by lower lows in price and higher lows in the RSI, suggesting a potential temporary upward move or consolidation. This divergence is now invalidating the previous bearish divergence on the same timeframe.
- US Stock Market Support Bounce: The S&P 500 is experiencing a bounce from a major support area, which Josh notes is repeating history. This short-term strength in traditional markets is providing a tailwind for Bitcoin and the broader crypto market. The sideways consolidation in the S&P 500 between support and resistance remains unbroken.
- Continuity of Long-Term Bearish Trend: Despite the short-term bullish signals, Josh reiterates that the overarching trend for Bitcoin on the weekly chart remains bearish, with the super trend indicator still in the red and the long-term bearish divergence active. This multi-month bearish trend is the dominant factor.
- Bitcoin's Expected Short-Term Movement: For the next 1-2 days, Josh anticipates a slight bullish relief or choppy sideways price action for Bitcoin, driven by the 2-hour bullish divergence. He also notes a possible short-term liquidity grab around $66.4K - $66.5K as a potential catalyst for reconfirming the bullish divergence before a potential bounce. The broader expectation for the next 1-2 weeks is continued choppy sideways price action within the larger bearish trend.
- Bitcoin Dominance and Altcoin Performance: Bitcoin dominance is trading sideways, indicating that altcoins are likely to mirror Bitcoin's price action. This means that any short-term relief seen in Bitcoin could translate to similar relief for altcoins on average.
- Ethereum (ETH) Analysis: Ethereum continues to trade within a sideways range on the 3-day chart, mirroring Bitcoin's short-term consolidation. The 3-day Ethereum RSI is resetting from oversold conditions, which has been Josh's prediction for over a week following a flash crash. The daily chart shows ETH squeezed between support around $1.8K (with developing short-term support around $1.92K) and resistance between $2.15K and $2.25K. The expectation remains for choppy sideways action for at least another week, within the larger bearish trend.
- XRP Analysis: XRP is holding above the crucial support area between $1.30 and $1.40. The 3-day XRP RSI is still playing out an oversold signal, which Josh predicted would lead to at least a local low and some sideways action or a slight bounce for the next few weeks. However, the longer-term weekly bearish divergence remains unconfirmed, and the overall bigger picture for XRP is still bearish. The current prediction is for continued sideways action or a slight bounce for at least the next week.
- Solana (SOL) Analysis: Solana is also holding above its crucial support between $75 and $80 and is playing out an oversold signal on the 3-day RSI. This suggests a possibility of choppy sideways action or a slight bullish relief over the next few days or weeks. Resistance is noted between $95 and $105. No significant changes have occurred for SOL.
- Chainlink (LINK) Analysis: Chainlink is in a similar position, bouncing from support between $7.90 and $8.50 and showing an oversold signal on the 3-day RSI. Resistance is seen between $9.50 and $10. Josh predicts LINK will remain within this range for at least the next week, experiencing either slight bullish relief or choppy sideways price action.
Important Insights
- Short-Term vs. Long-Term: Josh consistently differentiates between short-term trading opportunities (like the current bullish divergence) and the dominant long-term bearish trend. It's crucial to understand this distinction to avoid being misled by temporary price movements.
- Repetition of History: The current market action, particularly the bounce in the S&P 500 and the confirmation of bullish divergence in Bitcoin, is seen as a repetition of historical patterns, reinforcing the short-term relief narrative.
- Oversold as a Reset, Not a Bottom: Similar to previous analyses, oversold RSI signals are interpreted as opportunities for short-term relief or consolidation, not necessarily an indication of a market bottom or a trend reversal.
- Liquidity Grab Potential: Josh highlights the possibility of a short-term liquidity grab around $66.4K - $66.5K for Bitcoin, which could potentially reconfirm the bullish divergence before a broader bounce.
Trading Opportunities and Positions
- Short-Term Bitcoin Bounce Expectation: Based on the 2-hour bullish divergence, Josh anticipates a short-term bullish move or choppy sideways action for Bitcoin over the next 1-2 days. This could present opportunities for short-term long positions, especially if the price consolidates around the $66.4K - $66.5K liquidity level before a potential move up.
- Altcoin Relief Potential: Given Bitcoin's potential for short-term relief and sideways trading, and with Bitcoin dominance trading sideways, there is a potential trading opportunity for selected altcoins to experience similar relief. Investors could consider looking for altcoins that are also showing oversold conditions on shorter timeframes or are holding strong support levels.
Potential Future Trading Opportunities/Strategies
Based on Josh's analysis, here are some potential trading opportunities and strategies to consider:
- Short-Term Bitcoin Longs: With the confirmed 2-hour bullish divergence, traders might look to enter short-term long positions on Bitcoin, especially if it tests and holds the $66.4K - $66.5K liquidity zone. The target would be for a temporary bounce, possibly towards the $71.8K resistance, or simply to capitalize on choppy sideways action. This strategy is valid for the next 1-2 days.
- Selective Altcoin Buys: As Bitcoin experiences short-term relief, and with Bitcoin dominance trading sideways, there's an opportunity to look for altcoins that are showing similar oversold conditions or are holding key support levels. For example, if ETH holds above $1.8K, traders might consider a short-term long position targeting the $2.15K - $2.25K resistance zone. Similarly, for XRP, if it continues to hold above $1.30, a short-term long could be considered targeting the $1.40-$1.50 area. For SOL, holding above $75 could present an opportunity for a short-term long towards $95. For LINK, holding above $7.90 could signal a potential short-term long towards $9.50. These opportunities are contingent on the continued stability of their respective support levels and the overall market sentiment.
- Scalping within Sideways Ranges: For assets like ETH, XRP, SOL, and LINK, which are expected to trade sideways for at least another week, scalping strategies within their defined support and resistance ranges could be profitable. This involves buying at support and selling at resistance, capitalizing on the choppy price action.
- Monitoring for Long-Term Reversals (with caution): While the current focus is on short-term relief, Josh's long-term bearish outlook remains. Traders should remain vigilant for any signs of a true trend reversal on higher timeframes, but for now, the strategy is to play the short-term moves within the established bearish context.
Consistencies and Shifts in Forecasts
The primary shift in this analysis is the confirmation of a short-term bullish divergence on Bitcoin's 2-hour chart, introducing the possibility of a temporary bounce. This contrasts with the previous emphasis on the immediate bearish pressure from resistance rejections. However, the core message of a larger, multi-month bearish trend remains consistent. The analysis of altcoins like ETH, XRP, SOL, and LINK also aligns with previous forecasts