Bitcoin continues sideways as traders fall into despair
Good morning, traders. Overnight, we continued to see more of the same - Bitcoin's price consolidating within a range. It seems almost a given that price is going to drop below $5000, right? I mean, generally, everyone is expecting it, aren't they? That's all I've been able to find in cryptotwitter and TV. Yes, there are a couple of individuals suggesting price will rise but they are very much in the minority. So what happens if it doesn't go as planned? What happens if it goes up rather than down? Are you prepared? Trading/investing is a game of risk management. Period. It's not a game of buying at the absolute lowest price and then selling at the absolute highest price. Attempting to do this is only going to result in most traders losing a lot more than they'll ever gain. No matter how good the set up appears, the only thing that you control is how much you lose. Traders who take this to heart are the best-prepared for possible surprises.
A gap remains around $6680 on the 4H chart, so my expectation is to see it filled. However, as we have continued to discuss, there is the possibility to see a spring down into the lower-$5000s before then. I feel that is less likely than more likely at this moment because price is only about $400 away from that gap and it is printing a descending broadening wedge, suggesting price will move up (a bit at least) before moving down below the support of the DBW. We can also see the symmetrical triangle that is printing, which currently gives us a target of $6780 if it breaks up and $5760 if it breaks down. An upward break would fill the aforementioned gap. Remember, CME Bitcoin futures have multiple gaps well above the current price level that remain unfilled as well.
The U.S. dollar index continues consolidating and my expectation is that a break up should see Bitcoin price falling and a break down should see it rising. Generally, Bitcoin has diverged from the index. As you know, I am of the belief at this time that the U.S. stock market is in distribution which should lead to markdown during Q4 of this year. Last night I discussed the unemployment metric and how it's always led to a recession soon after dropping below 4%. We most recently recorded 3.9%. This would seem to support the stock market distribution narrative. Bitcoin dominance is currently sitting at 58% and growing, which is a good sign, historically signalling a bull run building. Baakt should be online in November, and since their system is already approved, depending on how they worded it they may be able to self-certify which means they wouldn't need CFTC approval. However, I don't believe the CFTC would not approve them at this time anyway. I think most retail traders are missing the significance of Baakt. This is most likely the result of falling into the herd mentality that price must necessarily go, and remain, down for the next year. In reality, we should see a lot of money flow into the space once Baakt is up and running. Furthermore, while I have stated my position is that the SEC will likely take as long as it is allowed to render a final decision on the VanEck SolidX ETF, I would not be surprised to see a sudden approval decision prior to the Baakt launch. The SEC should be feeling significant pressure as Baakt would provide strong competition. This ETF approval should see significant money inflows as well. Arguments abound whether the more times you touch an area the weaker or stronger it becomes. Generally, if it is a support or resistance area, then the more times it's touched the stronger it becomes. If it is a demand or supply zone, then the more times it's touched the weaker it becomes as every touch is taking out waiting orders. There are also debates of whether price has been printing a large descending triangle or descending wedge. Looking at a line chart, rather than a candle chart, the descending triangle narrative is a lot less convincing, and if one must compare 2014 to 2018, then the line chart shows a much greater likelihood of nearing an exit of the corrective cycle rather than starting it, as I discussed during last night's stream.
But none of this is definitive. They are all just different ways of looking at the information, which is what any serious trader should be doing. Because I am a strong proponent of volume and price action analysis, the daily OBV seems to be the most important thing to watch at this time. It has been printing a descending wedge for most of this year, and is nearing the end. A push through the top of the wedge would be a bullish signal as it shows the smart money increasing their positions in the asset. BTCUSD shorts remain near ATH levels and longs appear to be nearing the end of their own descending wedge. The only other thing I can really see at this time is that price is sitting under the very thin 4H cloud, so a sudden jolt up could throw it through the cloud rather easily which would set up a showdown with the $6900 area and the shorts that await. Trade carefully and apply strong risk management if you choose to be active in this current sideways market.
A gap remains around $6680 on the 4H chart, so my expectation is to see it filled. However, as we have continued to discuss, there is the possibility to see a spring down into the lower-$5000s before then. I feel that is less likely than more likely at this moment because price is only about $400 away from that gap and it is printing a descending broadening wedge, suggesting price will move up (a bit at least) before moving down below the support of the DBW. We can also see the symmetrical triangle that is printing, which currently gives us a target of $6780 if it breaks up and $5760 if it breaks down. An upward break would fill the aforementioned gap. Remember, CME Bitcoin futures have multiple gaps well above the current price level that remain unfilled as well.
The U.S. dollar index continues consolidating and my expectation is that a break up should see Bitcoin price falling and a break down should see it rising. Generally, Bitcoin has diverged from the index. As you know, I am of the belief at this time that the U.S. stock market is in distribution which should lead to markdown during Q4 of this year. Last night I discussed the unemployment metric and how it's always led to a recession soon after dropping below 4%. We most recently recorded 3.9%. This would seem to support the stock market distribution narrative. Bitcoin dominance is currently sitting at 58% and growing, which is a good sign, historically signalling a bull run building. Baakt should be online in November, and since their system is already approved, depending on how they worded it they may be able to self-certify which means they wouldn't need CFTC approval. However, I don't believe the CFTC would not approve them at this time anyway. I think most retail traders are missing the significance of Baakt. This is most likely the result of falling into the herd mentality that price must necessarily go, and remain, down for the next year. In reality, we should see a lot of money flow into the space once Baakt is up and running. Furthermore, while I have stated my position is that the SEC will likely take as long as it is allowed to render a final decision on the VanEck SolidX ETF, I would not be surprised to see a sudden approval decision prior to the Baakt launch. The SEC should be feeling significant pressure as Baakt would provide strong competition. This ETF approval should see significant money inflows as well. Arguments abound whether the more times you touch an area the weaker or stronger it becomes. Generally, if it is a support or resistance area, then the more times it's touched the stronger it becomes. If it is a demand or supply zone, then the more times it's touched the weaker it becomes as every touch is taking out waiting orders. There are also debates of whether price has been printing a large descending triangle or descending wedge. Looking at a line chart, rather than a candle chart, the descending triangle narrative is a lot less convincing, and if one must compare 2014 to 2018, then the line chart shows a much greater likelihood of nearing an exit of the corrective cycle rather than starting it, as I discussed during last night's stream.
But none of this is definitive. They are all just different ways of looking at the information, which is what any serious trader should be doing. Because I am a strong proponent of volume and price action analysis, the daily OBV seems to be the most important thing to watch at this time. It has been printing a descending wedge for most of this year, and is nearing the end. A push through the top of the wedge would be a bullish signal as it shows the smart money increasing their positions in the asset. BTCUSD shorts remain near ATH levels and longs appear to be nearing the end of their own descending wedge. The only other thing I can really see at this time is that price is sitting under the very thin 4H cloud, so a sudden jolt up could throw it through the cloud rather easily which would set up a showdown with the $6900 area and the shorts that await. Trade carefully and apply strong risk management if you choose to be active in this current sideways market.