Bitcoin was volatile today as we predicted, swinging higher and lower covering almost $1,000 in either direction before closing the day in the red. It's worth noting that Bitcoin also closed the day below the 50 Day EMA, eliminating that as potential support, at least for now. We previously stated that we would only trust the 50 Day EMA as support if Bitcoin can rise above it impulsively, and then successfully bounce off it as support.
(October 1, 2020 9:00 PM EST)
Support: $10,000 continues to be strong support, which is a significant psychological inflection point. The 50 Day EMA didn't hold as we suspected might happen, so look for a move lower and what support holds. 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 battlefield, 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: Bitcoin's tightening triangle pattern has a bearish tone to it, as we hinted at before, and today's breach of the 50 Day EMA supports that notion. Today's volatility was much attributed to the market's sentiment as negotiations for a new stimulus deal loomed, then failed. There were also wild swings in the USD, Euro, gold, and bizarrely equities rallied strongly despite non-news, if anything disappointment. I still think over the next month we'll see some more pain in most markets, BTC included, but that is a medium-term setup for a bullish wave up. In the mean time, I am not selling BTC, only looking to add on dips. Shorting BTC has almost always been a terrible idea; the short-term trend might be choppy to the downside, but longer term, it's the risk:reward is a no-brainer.
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