Bears follow the script (Lab Note #48)

(www.investorideas.com Newswire)

Crypto opened the week exactly as last week’s charts warned: failed bullish defenses, new breakdowns, and momentum indicators turning solidly bearish.

Both BTC and ETH have now confirmed the structural cracks we highlighted earlier, and unless bulls regain lost levels quickly, the path of least resistance remains lower.

BITCOIN: Breakdown Confirmed, and the Bears Aren’t Done Yet

We’ll start with the quote from Monday’s Lab Note #44:

(…) The first and most important thing visible on the BTC daily chart is the red bearish gap, which dragged the price below the lower limit of the green rising wedge.That alone is a structural warning.Moreover, the Stochastics only produced a sell signal, adding downward pressure on momentum.

So here’s the crucial part… if bulls fail to reverse this breakdown (…) then the risk of activating the bearish scenario from December 11 (Lab Note #39) will increase sharply (…)

Looking at the chart above, we see that the bulls failed completely.

Monday ended with a large, clean bearish candle firmly below the wedge. Moreover, the price tried to stabilize within the orange consolidation, but due to the aforementioned (confirmed) collapse, the momentum is still pointing down.

Furthermore, all sell signals remain active, meaning that the December 11 bearish scenario remains 100% valid:

(…) If sellers manage to get below the lower edge of the green wedge (and especially if we close below it daily
[…]), the road to 8,000 could open up quickly. At this point it is also worth noting that the Stochastics just issued a sell signal, which could be the trigger that bears need.

(…) if bulls want to fight back, they need to close above the resistance wedge + gap zone. Until then? The risk is to the south.

ETHEREUM: same message, different graph

Let’s start with Monday’s ETH quote:

“Indicators have already produced sell signals, which means that if the bears manage to push ETH below the consolidation lower limit and the red wedge support line, the December 11 bearish scenario will become the leading scenario.”

And again… that’s exactly what happened: Monday closed below the consolidation and below the wedge support. Moreover, the sell signals remain active on all major indicators, meaning that ETH (just like BTC) has shifted to the bearish scenario of December 11, and unless bulls quickly regain the lost levels, the momentum says they are not strong enough to reverse this now.

“(…) If the price closes below the upper line of this formation, expect a new test of the previously broken wedge line. And if it breaks too? That would be the second invalidation, which could open a clear path to:

• 
  the bottom line of the green channel (currently around 2823.55)
• the 61.8% Fibonacci retracement
• 
  possibly even a full retest of the falling wedge support (currently around 2490)

Lab Takeaway – What should traders pay attention to today?

Both BTC and ETH have confirmed breakdowns and active sell signals, meaning the sellers are controlling the short-term trend.

The bearish scenarios of December 11 still prevail. To change the outlook, bulls would have to climb back above the support levels they just lost and stay there. Until that happens, the market will follow the downward path.

See you on the next chart.

Anna

PS If this update helped you understand what’s actually happening in crypto, remember this: Premium readers knew this the week before. If you don’t want to hear about big moves after they happen, join the traders who stay ahead of them – the door is open when you’re ready

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