Don't expect more charts. Or do. Or not. Maybe. I dunno.
I predicted a week ago that BTC would drop due to it rejecting the top of the channel and being severely overbought, but also DXY being severely oversold and holding resistance at the bottom of its price channel, and the possibility that negative DXY news could impact stocks, thereby driving bond yields up and giving short-term strength to DXY. This all happened as predicted, as BTC made lower highs and lower lows before retracing last night. Now, where to for BTC?
If bulls have the strength, given that we have now closed above mean reversion, BTC could try to retest the 30300 area, giving us better confirmation of the top of our short term (downward) price channel, if rejected at this area. A close above this area would be bullish for BTC, and we could expect a new high. Closing below this area would mean the price continues to fall in our downward price channel, and with the top of the channel firmly confirmed, this could mean a deeper retrace. Likely rejections for the retrace would be the (white) mean reversion line, or the larger channel's mean, represented by the dashed yellow line.
Keep in mind all of this is happening at the top of a larger, long-term channel, one that is still severely overbought and has never retested the previous lows. Also keep in mind that an asset can remain overbought or oversold for long periods of time, so, if fundamentals drive DXY through it's support and confirm it's downtrend (expected) we could see more BTC up.
Fundamentally, DXY should remain weak unless there are any interventions by the Fed or important fundamental updates. That said, negative news can also boost the dollar, as we saw this week when stocks took a hit, and bonds rejected the bottom of their channel, therefore causing BTC to dip. This is why it's important to never remain a perma-bear or perma-bull, understand the fundamentals that are being represented on your chart, and practice good TA. In any case, BTC severely needed a retrace for a healthy uptrend, and that could be what we are seeing this week.
I predicted a week ago that BTC would drop due to it rejecting the top of the channel and being severely overbought, but also DXY being severely oversold and holding resistance at the bottom of its price channel, and the possibility that negative DXY news could impact stocks, thereby driving bond yields up and giving short-term strength to DXY. This all happened as predicted, as BTC made lower highs and lower lows before retracing last night. Now, where to for BTC?
If bulls have the strength, given that we have now closed above mean reversion, BTC could try to retest the 30300 area, giving us better confirmation of the top of our short term (downward) price channel, if rejected at this area. A close above this area would be bullish for BTC, and we could expect a new high. Closing below this area would mean the price continues to fall in our downward price channel, and with the top of the channel firmly confirmed, this could mean a deeper retrace. Likely rejections for the retrace would be the (white) mean reversion line, or the larger channel's mean, represented by the dashed yellow line.
Keep in mind all of this is happening at the top of a larger, long-term channel, one that is still severely overbought and has never retested the previous lows. Also keep in mind that an asset can remain overbought or oversold for long periods of time, so, if fundamentals drive DXY through it's support and confirm it's downtrend (expected) we could see more BTC up.
Fundamentally, DXY should remain weak unless there are any interventions by the Fed or important fundamental updates. That said, negative news can also boost the dollar, as we saw this week when stocks took a hit, and bonds rejected the bottom of their channel, therefore causing BTC to dip. This is why it's important to never remain a perma-bear or perma-bull, understand the fundamentals that are being represented on your chart, and practice good TA. In any case, BTC severely needed a retrace for a healthy uptrend, and that could be what we are seeing this week.
Comment:
Top of channel is now confirmed.
Trade active:
Remember when I said, "Keep in mind all of this is happening at the top of a larger, long-term channel, one that is still severely overbought and has never retested the previous lows"? Well, BTC decided to retest earlier sooner than later, since, again, it was severely overbought.
Comment:
Comment:
We are now consolidating a bit, but given that mean reversion was broken easily, we will likely see more down for a re-test of the bottom of the channel. Of course, this will depend on stocks, but so far the outlook for stocks is not looking great either.
Comment:
A little Renko outlook on the long term channel. I shared a similar chart in chat more than a week ago. This shows that, despite all the excitement, we are still firmly in a (long-term) downtrend and rejecting the channel's top. If BTC is going to break that top, it will need a retrace, so the question is if it wants to go to the bottom of its (short-term) channel first or try again now. As mentioned before, stocks will need some very big news to reverse their current trajectory, so if the picture doesn't change, the most likely path for BTC is to retest the bottom of its current (short-term) channel and if that channel fails, we are looking at a nasty drop.
Comment:
The Kagi view. Price below mean rejected. I would be very careful with buys here until the break and retest of these critical areas.