Recent Top on Bitcoin Price Triggered by the Technicals

What has been a consistent and healthy rally up to the $717.99 local high over the past few weeks, has finally hit a wall. While many tops come on bearish news or fundamentals, this one was almost purely technical in our opinion.
Two weekends ago we mentioned that the action over those two days would determine the flow of funds into the market until the end of the month and indeed that is precisely what has materialized. What were overbought conditions last week, turned out to be signs of strength as a continuation to the upside broke not only the key $700 level, but also tested the upper bounds of a strong resistance area around $720. Then, following that $717.99 local high on BitStamp on bearish momentum and volume divergences, the market failed to break back above there thus leading to a fairly significant dump which took price below the $700 mark and broke near term market structure. Now price is currently just above there, waiting for a catalyst one way or the other. For the time being we are still leaning towards a downside and we would be buyers of that dip if it can make it into one of our new buy zones.
Moving on the all-important technicals, we can see on the daily chart below that price is still at the upper end of the medium term OTE short zone and is outside of the volume profile value area, all on very overbought momentum indicators.

This post was published at Coin Telegraph on 2016-10-31.