Bitcoin dropped on Tuesday, giving back nearly all of yesterday's gains. Bitcoin was having an uneventful day until the 10 year rates dropped like a rock Tuesday afternoon, sending equities, gold, and Bitcoin down into the close. Depending what happens in Asia tonight, we could see the same thing continue tomorrow, and possibly into next week.
(October 6, 2020 8:00 PM EST)
Support: $10,000 continues to be massive support, but after today's pullback, the $10,500 level is now immediate support under pressure. It's not a significant level, but $10,000 not far under is. If BTC falls below there and even $10,000, look for support at the 200 Day EMA around $9,600 and then $9,000.
Resistance: At this point I consider the 50 Day EMA immediate resistance, as I can't call it support until BTC breaks clear above it, pulls back lower, and successfully tests it as support. 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, then I think the triangle has been resolved and we have an upward bias, at which point 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: Today's price action was not encouraging, and furthers my thesis I mentioned yesterday about October volatility and upcoming market weakness. The drop today doesn't prove anything indefinitely but further drop from here over the next couple days would be enough to confirm a downward break of the tightening triangle pattern that has been developing for a couple months now. Again, I think this is temporary market weakness, which should be resolved by December at the very latest. However, the question at this point, assuming the market confirms lower lows, is how low this short term trend will reach.
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