Bitcoin rallied a bit on Wednesday, recovering about half of yesterday's drop, but otherwise having a quiet day. We're about at the end of this tightening triangle that's been consolidating for over 2 months now; These things usually result in a big move.
(October 7, 2020 8:00 PM EST)
Outlook: Bitcoin didn't do much today, similar to other markets. Frankly, BTC is trading much like a currency pair at this point, trading opposite of the US Dollar. If we're to take a Forex view of Bitcoin, we should be looking for weakness or strength in the DXY (US Dollar Index) and trade the other direction. Of late, the DXY has been consolidating after a big move up, showing signs of attempts to resume higher to higher highs. If BTC is inversely correlated, this should bode poorly for BTC. I think the chart above shows a tightening wedge following an impulsive move down, which means the usual subsequent move would be a breakdown from the triangle. However, that breakdown will hopefully lead to the completion of the correction in the form of a C Wave, thus allowing a new 5 wave structure to the upside to begin anew. In most markets, 95% or even more of the time is spent in sideways consolidation patterns, with only a few percent being the actual action. It's been quiet long enough; Bitcoin is due to wake up this month, possibly before this weekend.
Support: $10,000 continues to be massive support, $10,500 level is too choppy and Bitcoin hasn't been able to hold it so if anything that's resistance. If BTC falls below $10,000, look for support at the 200 Day EMA around $9,600 and then $9,000. I wouldn't be surprised to see this happen, but I think it'll get bought quickly.
Resistance: Same story as has been the case of late. 50 Day EMA immediate resistance. 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.
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