Good Friday morning, traders. We have made it to Friday and Bitcoin continues to move sideways after the shakeout almost two days ago. Price is not consolidating in this area, however volume is dropping, suggesting that accumulation may be taking place. As pointed out a day ago, and has become clearer at this time, price may be printing a checkmate pattern. This is noticeable as a strong drop with wider-spread candles, followed by an abrupt stop and sideways movement with much smaller-spread candles and dojis, and then culminates with a strong thrust back up. Price has been increasing slightly within in a channel while in this range creating a possible bear flag with a target of $5200. On the 15 minute TF, we can see a potential shorter target of $5650. This $5200-$5650 range is right inline with the $5460-$5250 area I spoke about months ago if we have a terminal shakeout. So traders should be using caution and strong risk management if trading this current price range.
What I find most compelling on the 1D chart is OBV which has been in a descending channel since January 2018, but has been rounding the bottom creating a descending wedge that it is near possibly breaking out of to the upside, which will also take OBV out of that channel. This is happening while price is nearing the end of its own descending wedge that it's been in since February. If we do see OBV pop to the topside, then we should expect price to follow, but it could take until the end of this month to see it happen. This is playing out differently than in 2014 when OBV continued in a descending channel until it finally popped out in September 2015 culminating in the end of that year's accumulation cycle. This may be signalling that BTC is nearing the end of its own current accumulation, which is staunchly in opposition to the CT which believes price MUST fall to $3000 and remain in a bear market for another year or two.
We can see that price is having trouble pushing through the pivot on the smaller TF, but if successful then I expect it to target the $6650-$6705 area as mentioned last night. This would also put price right under the R1 pivot. I have seen some over-leveraged shorts getting liquidated on tucsky.github.io/SignificantTrades/ this morning and expect there are many more within the next $500 up. A strong push in price should result in a domino effect squeezing shorts, currently sitting just under their ATH, into the upper level of shorts that remain at $7200-$7600. While in no way guaranteed, this is the alternative scenario I am watching in addition to the possible continued drop.
The DXY popped this morning after the government's employment report showed exceptionally strong wage growth - fastest since the June 2009. What this means is that the when the Federal Reserve meets later this month, they have more fuel to raise interest rates as they may see this wage growth indicating that inflation is increasing. If the interest rate rises, the DXY will likely also rise. This may not bode too well for Bitcoin as it tends to move in opposition to the DXY, in much the same manner as gold does.
The S&P and DJI remain near their ATHs at this time. As mentioned before, I believe they may currently be in distribution, with DJI's OBV showing this likelihood greater than the S&P's. While the S&P recently marked a new ATH at $2916.50 at the end of August, the DJI is nearing its ATH from January of this year at $26435.34. At the very least, the DJI is expected to hit $26439.48 so that it fills the down gap that printed right after January's ATH. A stock market correction would not be a surprise as that market has had ten years of growth without one after the 2008 financial crisis and the growth of which was precipitated by QE.
XAU/USD is about to hit overbought once more on the weekly suggesting an appreciation in value is likely to occur sooner rather than later. Daily OBV has been in a downtrend since June of this year, but recently saw a bounce on August 16th which it has been continuing to extend. Is this the start of a new uptrend in OBV or is it merely a dead cat bounce leading to further devaluation of gold? I would like to see gold breach $1220 in the near-term to suggest possible continued appreciation. Remember, gold diverges from DXY, as does Bitcoin, so we will continue to watch how all these markets play out to get a better picture of Bitcoin's direction.
I will be discussing all of this during our live streams today at 10 a.m. and 9 p.m. CST.