This week started with trends pointing to 14k Bitcoin but ended with a bang showing a strong sign of strength from BTC and the S&P.
Obligatory: this is not financial advice and I am not a financial advisor.
This week started with trends pointing to 14k Bitcoin but ended with a bang showing a strong sign of strength from BTC and the S&P. I'm seeing lots of important charts that are giving me lots of hope for the market to recover. Is it time?
VIX
After a bounce off support the VIX looks like it's ready for at least another test back down. Remember, this is basically a fear/greed index chart for the S&P and down is what we want to see.
DXY
I posted this earlier on twitter but it's such a good indicator for risk-on/risk-off. It shows the strength of the dollar. We can see it didn't quite hit the trend line but it DID hit the RSI trendline. Continued higher highs on weakening strength = reversal.
Why is this so important though?
Over the long term the infinite supply of fiat will always trend downard but the spikes where it counter trends will be extremely volatile because they happen during times of crisis. US Dollar value goes up because it's safer to be in the dollar than any other fiat currency. Anything even slightly risky gets sold off for a safe haven. The US Dollar is the Earth's global reserve currency. It's the safest asset in the world (right now). You can see the euro and yen have been weakening vs the dollar because they're being sold off to buy USD so you can imagine how tech stocks and then crypto would stand on the totem pole of risk assets to sell first. So when you start seeing the US Dollar's strength finally topping out means that dollars are flowing from risk off -> risk on. Crypto is highly risk on.
S&P
The S&P is looking great this week. We tested and affirmed that 3900 is now a support/resistance level and we're bouncing very strongly off of it. I expect us to head towards another test of the daily 200 MA in the next week. S&P is the tech stocks index so that's why it's so important to watch. The S&P is to Bitcoin as Bitcoin is to alts.
BTC
At the start of this week Bitcoin was on a highway to 14k hell and crypto winter for years. Today it displayed an amazing sign of strength off of the bottom of the range. When these types of moves happen I'm glued to it because this is the type of environment where traders keep trying to short and then they get squeezed bit by bit so price action keeps going further up which brings on the pain to the people who are sidelined still who eventually FOMO in and squeeze more shorts which continues the cycle.
You can see the swell of open interest as bitcoin rises here. Everyone is shorting. Everyone thinks it's going to test back down to 19000 but in these conditions all it takes is just a lit match of a market buy to start toppling the leveraged dominos.
DCR
Not much to say here. Decred will have to wait for Bitcoin to give it permission to move. Until that time we can take a look at DCR/BTC. There's many numerous volatile pumps the past month after the massive pump at the beginning. We can see that the composite operator keeps testing levels over and over again. Usually this is done to help them test for liquidity pockets to measure both resistance and where they can find high volatility price ranges. Just another tactic for manipulation.
Conclusion
Things are looking a ton better than at the beginning of the week. I have a feeling we're going to see some strong moves but even if we don't we'll definitely at least range (black swan events allowing). Markets can look terrible one day and amazing the next. The best thing you can do is adapt and employ strategies.
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