Bitcoin traders looking to hastily jump into the market at record prices due to the “fear of missing out” (FOMO) should be cautious as the market sentiment has shifted towards confusion, deviating from the strong bullish momentum seen recently.
On Thursday, BTC saw significant price swings, reaching a high of nearly $103,900 before dropping to $91,100 and closing the day around $97,000. This wide trading range created a “high wave candle,” a pattern characterized by a small body and long shadows that indicate uncertainty in the market.
The appearance of the high wave candle at all-time highs suggests that the bulls may be losing control, with sellers gaining strength. This cautionary signal is particularly noteworthy at a time when BTC struggled to maintain its gains above the $100,000 mark.
According to the CMT Association, the high wave candle signifies confusion in the market, with the extended shadows resembling large ocean waves. This pattern, combined with the bearish divergence in the relative strength index (RSI), points towards a potential consolidation phase or a temporary bearish trend reversal.
Analysts have also expressed concerns about an overcrowding of long positions and the possibility of price corrections. The market remains uncertain as long as BTC stays within Thursday’s trading range, with a break below indicating further selling pressure and a move above suggesting a return to the bullish trend.
Furthermore, Deribit-listed BTC options expiring in December now show a three volatility premium for calls over puts, down from the five or higher levels seen previously. This shift indicates a decline in bullish sentiment among traders.
In conclusion, traders should approach the current market conditions with caution and avoid impulsive decisions based on FOMO. It is essential to closely monitor price movements, technical indicators, and market sentiment to make informed trading decisions in the volatile cryptocurrency market.
