After weeks of tight trading, short sellers finally flinched as even modest buying sparked a broader wave of short covering for Bitcoin. The technical outlook is broadly bullish, with Bitcoin significantly outperforming the tech-heavy Nasdaq, positioning it well for further gains.
Although Bitcoin is outpacing the Nasdaq, the Nasdaq has started to move above its March swing low and is approaching a test of the 50-day moving average. It appears poised to be the first index to attempt a V-shaped recovery and is well positioned to lead other indices higher
The Russell 2000 (IWM) still has some distance to cover to reach its March swing low but appears well positioned to get there.
Regarding the S&P 500, a critical moment has arrived. If the bears are going to take control, the S&P 500 will likely be the first index to reveal it, as it currently trades just beneath key resistance.
Tomorrow is wide open. Bulls seem to have momentum with the Nasdaq, Bitcoin, and likely the Russell 2000, while bears are hanging onto the S&P 500. Even with a bullish outlook, a retest of the recent lows would still be expected — though just because I anticipate it doesn’t guarantee it will occur.
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