Bitcoin and the descending wedgeGood morning, traders. Bitcoin is doing what Bitcoin does lately -- continuing to consolidate. We are getting a good rally from last night's reactionary low near $6400. This morning we can see buying pressure pushing price back up toward $6500. Bitfinex has been carrying a bit of a premium and continues to do so this morning as it is sitting about $50 higher than the other exchanges. This presents arbitrage opportunities for traders with access to the exchange as they are able to buy Bitcoin at a cheaper rate on another exchange and sell it for the premium on Bitfinex. Traders doing so must be careful, however, since transfer times may take their tole as the premium disappears before they are able to sell their Bitcoin on Bitfinex.
Currently, we can see price printing a flag suggesting a target of $6500/$6515 upon successful breach of the flag's resistance. This upward progression should bring price to the longer-term descending resistance noted, which began on September 28. Price movement for the past week has printed the large descending wedge seen in the chart and suggests that price may ultimately be more likely to head up and out, than down. The 1H MACD is attempting to complete a bullish cross and RSI has moved out of oversold after last night's sell pressure. We can also see that volume has continued to drop as price dropped, signalling a weakening of the momentum. As noted during our live streams, there are various price gaps on the 15 minute chart up to $6900 that remain unfilled. Therefore, the bias should remain bullish toward $7000. At that point, traders need to carefully watch what unfolds.
DXY continues to print a large ascending broadening wedge on the 1D suggesting that we can expect downward progression sooner rather than later. The daily pivot sits at $94.89, and a drop through it would be bearish for the index. The R1 pivot sits at $95.97, and a close above it would be bullish for the index. While the dollar has received some support from the rising interest rate, there are indicators in the economy suggesting a recession is on the horizon. These include the stock market's appearance of distribution and bearish divergences over longer periods of time. As that materializes, generally we can expect the currency to fare worse because there is less attraction to invest in the country. But what does that mean for Bitcoin? It depends on how it continues to react to what is going on in the economy. An interesting short read on this was presented in Bloomberg a couple of months ago (www.bloomberg.com). Generally, the narrative continues to be Bitcoin as digital gold, but traders cannot ignore the reality that it is a very risky asset and money looks for safe havens in times of uncertainty, not increased risk. However, Bitcoin has many things going for it including the fact that it appears to have been in accumulation throughout 2018, OTC continues to grow exponentially, and Bakkt will be coming online next month, as well as the likelihood of a BTC ETF approval before the end of 2019.
