Bitcoin's CBOE shakeout. CME and ETF upcoming.
Good morning, traders. CBOE Bitcoin September futures expired yesterday and, as I warned, there was comparatively large volatility within an hour of the expiration. It began with a strong drop and ended with an even stronger pop that resulted in about $400 worth of upward movement. This appears to have been a terminal shakeout on the small TF accumulation we've been watching since September 17th as shown in the 15 minute chart to the right. If so, then the current price location is the BU/LPS and we should expect price to exit the top of the TR. On the larger TF accumulation, shown in the 4H chart on the left, this move was likely a spring, as well, and the current price location is the LPS within the TR. As of this point, price has moved exactly as I outlined a few days back, but that doesn't mean it must continue to do so. Until price exits the top of the TR, traders should remain cautious. If too much supply remains, then there will have to be additional tests/LPSs before price can move beyond $6600. Remember, price is still moving sideways within the 4H TR. Shorts have dropped just the slightest bit and longs remain stable.
As long as support holds at $6350-$6400, price should be preparing for a further move up. Price breaching the high from yesterday's shakeout at around $6510 is the key level to watch. If it drops below $6350, then we need to see $6200 hold in order to stay with the smaller TF TR. If price does manage to drop through that level then I will be watching for an initial bounce from around $6130. The one thing on the smaller TF that remains suspect is OBV, which has dropped. This could quite possibly be the result of the strong price movement during the shakeout and, as such, may not be an issue as the 4H TF shows OBV holding well so far. But traders should continue to watch OBV on their TFs. The 1H MACD is nearing a bearish cross, so if we don't see price move up soon, then we could see it dropping back down toward $6380. The 3D chart shows sideways movement for the past week as price nears the apex of the symmetrical triangle it is printing on the larger TF. We may not see any strong upward movement until CME expiration next week as a result.
DXY is dropping this morning and, as expected, gold is rising. Emerging markets continue to grow and there appears to be a strong correlation between EM and BTC. The DJI has finally filled the gap from January and is attempting to print an upthrust (higher high through the top of the TR). At this time, my opinion is that stocks are in distribution and, if so, then we should expect downward momentum after it completes this new ATH. Many people expect Bitcoin to do very well during an economic recession, but as I have pointed out it remains a very risky asset class and during recessions money flows into less risky assets. So, if stocks are in distribution, then we will have our first real opportunity to see how the world truly views Bitcoin -- as a store of value or very risky. All this being as it is, of course we have Bakkt coming online in November (which is huge news for this market and should give it a boost). We have CME September Bitcoin futures expiration in just over a week as well as the ETF decision. Both of these have the ability to play havoc on Bitcoin's price, so traders need to remain vigilant in their trading. The SEC is expected to delay a final decision on the ETF until Q1 of next year, but with Bakkt coming online there is the distinct possibility that we could see a surprise approval prior to then.
As long as support holds at $6350-$6400, price should be preparing for a further move up. Price breaching the high from yesterday's shakeout at around $6510 is the key level to watch. If it drops below $6350, then we need to see $6200 hold in order to stay with the smaller TF TR. If price does manage to drop through that level then I will be watching for an initial bounce from around $6130. The one thing on the smaller TF that remains suspect is OBV, which has dropped. This could quite possibly be the result of the strong price movement during the shakeout and, as such, may not be an issue as the 4H TF shows OBV holding well so far. But traders should continue to watch OBV on their TFs. The 1H MACD is nearing a bearish cross, so if we don't see price move up soon, then we could see it dropping back down toward $6380. The 3D chart shows sideways movement for the past week as price nears the apex of the symmetrical triangle it is printing on the larger TF. We may not see any strong upward movement until CME expiration next week as a result.
DXY is dropping this morning and, as expected, gold is rising. Emerging markets continue to grow and there appears to be a strong correlation between EM and BTC. The DJI has finally filled the gap from January and is attempting to print an upthrust (higher high through the top of the TR). At this time, my opinion is that stocks are in distribution and, if so, then we should expect downward momentum after it completes this new ATH. Many people expect Bitcoin to do very well during an economic recession, but as I have pointed out it remains a very risky asset class and during recessions money flows into less risky assets. So, if stocks are in distribution, then we will have our first real opportunity to see how the world truly views Bitcoin -- as a store of value or very risky. All this being as it is, of course we have Bakkt coming online in November (which is huge news for this market and should give it a boost). We have CME September Bitcoin futures expiration in just over a week as well as the ETF decision. Both of these have the ability to play havoc on Bitcoin's price, so traders need to remain vigilant in their trading. The SEC is expected to delay a final decision on the ETF until Q1 of next year, but with Bakkt coming online there is the distinct possibility that we could see a surprise approval prior to then.
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