Bitcoin | Everything is pointing lower at this point
this is going to be a little longer to give you all some context. So let's jump right into and take a look at BTC:
It was beyond important for BTC to close above the June low at $28.8K on the weekly. The close at ~$31.3K was in fact really strong considering the macro circumstances we experienced last week. We're now in our 8th consecutive week of selling as Peter already pointed out. Even though a correction from the current downtrend is long overdue (there have never been eight consecutive weeks of selling in BTC's history before), BTC is again on the edge of yet another leg down. We certainly don't want BTC to close below $28.8K on the weekly. Should BTC close below $28.8K, we will probably see the area of ~22K - 24.3K very soon. If we take a look at the volume profiler, we see that we're now in an area that doesn't really offer much in terms of buyer activity.
If BTC is able to recover at the current area, we could see a relief rally that could possibly bring BTC's price up towards the most recent CME gap at $34.455 - $35.925, which was created between the close on May 6th and the open on May 9th.
By the way, I just discovered that BTC closed the weekly CME gap from July last year with its weekly close. So as I told you before, these gaps tend to get filled. Let's hope the new one will be closed rather sooner than later 😉 🚀
If we take a look at the DXY chart, we see that the Dollar Currency Index has closed above its 20 years trend line . That's no surprise if you take into consideration how weak the Euro compares to the Dollar.
As I told you before, a rising DXY is problematic for each asset that is traded against the Dollar. The chart's parabolic ascent looks really worrying on the monthly time frame.
However, if we zoom in, we can see a first sign of a potential reversal:
👆 Yesterday's close was below the most recent daily low, which could indicate that a top has formed and we could expect some decline in the DXY .
Which would make sense considering that the ECB is going to rise interest rates too in the near future and thus, strengthening the Euro again.
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If we take a look to the EURUSD chart, we can see that the former lows of the Euro have held up so far, which is also an encouraging signal:
We also need to look at the S&P500 in order to understand where we are. The S&P500 is in a downtrend, that could potentially bring it down towards the 3700 - 3850 area. But there is also a chance that we might see a reversal after the upper end of the support area just mentioned has held up last week:
You might wonder, why we even take a look at all these charts, that doesn't have to do much with BTC upon a first look. But you have to understand the macro picture in order to understand what BTC might do in the future. So, given the fact that the DXY might top out due to the Euro regaining strength, this could give BTC (and other assets traded against the USD) some rocket fuel .
Now back to BTC and what to look for for the next couple of days:
BTC has tested the key level at $28.8K again and again last week. With each touch that level gets weaker. Unfortunately, each attempt of the bulls is countered and ultimately ended by the bears so far.
If we zoom in, we can see that the price action has been more or less sideways over the last couple of days, indicating that a breakout will occur sooner or later.
Now my guess is that we won't see a real reversal at the current levels. The 4 hour chart doesn't scream strength to me. We see lower lows, but we don't see higher highs. In addition to this, the volume is just too low. There is still no real buying interest at current level. It seems that everyone is just waiting to enter at lower levels. That is why I think we will eventually test that $28.8K level as support again, only this time it won't hold up.
We also need to observe how this ascending channel will play out. If BTC breaks below it, it could lead towards $22K.
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A break above $31.4K followed by a close at $32K would change my short-term sentiment towards bullish.
I hope that this helps you to navigate through this week. If you have any questions, please feel free to reach out and ask me 😎 💸