Bitcoin drifted a little lower on Wednesday, initially rallying before giving back the gains to close right at the 50 Day EMA. Two negative candles in a row is generally not a good sign, but I think this is more Bitcoin is showing us that it is still rangebound in this $1,000 range between $10,000 and $11,000 until this triangle formation tightens, at which point it's decision time. That time is drawing near.
(September 30, 2020 8:00 PM EST)
Support: $10,000 continues to be strong support, which is a significant psychological inflection point. The key here is whether or not Bitcoin will hold onto the 50 Day EMA as support, which is now under duress yet again. Look for action there tomorrow and Friday, and if it breaks, look for further support below at the 200 Day EMA.
Resistance: The 50 Day EMA remains a highly contested level, as BTC is clearly confined to a tightening triangle pattern that will eventually complete and break either higher or lower in dramatic fashion. If BTC breaks impulsively above the 50 Day EMA, look for a move to test $11,000 again. If it can break above $11,000, look for resistance every $1,000 until $20,000, at which point we might start seeing multiple thousand moves overnight. But let's not hold our breath, as there's a lot to be done before we're at that point yet.
Outlook: This consolidation pattern usually signals that the consolidation pattern is nearing its conclusion, and that an impulsive move up or down is to come soon once the wedge tightens and breaks. If you look at the chart above, we are not far from that point; in fact, this well aligns with the turbulent market seasonality that is late Sept-early Nov. We are in the middle of this seasonal weakness: case in point - equities selling off at NY close after completing a 5th Wave, as today also marked the end of Q3 and fund managers were looking to juice their portfolios or book losses for tax purposes before reentering positions. For now, I think continue to buy small, keep risk low, and look for major support levels below for larger longer-term tranches. I like buying on dips and DCA'ing every month on price weakness. I think the US presidential election, which is less than 5 weeks away, will be roughly around the time BTC might resume its next major leg up.
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