Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- The breaker retest can provide a good risk-versus-reward selling opportunity.
- Lower time frames showed that speculators have been shorting BTC in large volumes in recent days.
Bitcoin [BTC] faced rejection by the $30,000 resistance zone in mid-April. Like clockwork, the losses Bitcoin suffered in the following weeks were reflected in the altcoin market. A shift in sentiment towards the king caused investors to flee to stablecoins, evidenced by rising Tether [USDT] dominance.
Read Bitcoin [BTC] Price Forecast 2023-24
Short-term BTC holders were already making profits after BTC’s move above $25.2k. The ensuing rally caught many late bulls offside, and the report highlighted that the SOPR fell below 1, indicating that many addresses were selling their Bitcoin at a loss.
Retesting bearish H12 breaker means bulls are likely to have a torrid time
Source: BTC/USDT on TradingView
Late to the party Bitcoin bulls have already paid the price in recent weeks. Bitcoin’s rejection broke the market structure on the H12 timeframe on April 19.
On May 8, BTC dropped below $27.8k and at the time of writing was hovering around $26.8k.
This has been an important region for traders as it represented an H12 bullish order block as of March 28. Still, the bulls failed to defend this zone and the bullish OB was flipped to a bearish breaker.
The Awesome Oscillator moved below the zero line, registering red bars on its histogram to indicate strong bearish momentum.
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The Directional Movement Index also showed a strong downward trend, with the -DI (red) and ADX (yellow) both above 20.
In the South, the next levels to watch out for are $25.2k and $22.5k. There was a bullish order block below $25.2k in the $24k-$25k area which could act as a demand zone.
The month of May witnessed robust bearish sentiment in the futures markets
Source: Coin analysis
In addition, on May 8 and May 11, the Open Interest rate rose sharply while prices fell. This indicated that futures traders were massively shorting BTC and was a sign of extreme bearish sentiment on the lower time frames.
On both days, BTC plunged nearly 2.5%, instilling tremendous confidence in sellers. Further losses may occur in light of the sentiment in the lower time frame and the bearish structure in the higher time frame.