The U.S. stock market fell into the second half of last week with investors becoming more jittery. The Iran conflict, and the approaching U.S. midterm elections are taking centre stage. Extre
The U.S. stock market fell into the second half of last week with investors becoming more jittery. The Iran conflict, and the approaching U.S. midterm elections are taking centre stage. Extreme fear pervades the market. With oil, bond yields, and the DXY Index all potentially topping, could a contrarian rally begin that also feeds into Bitcoin?
Source: TradingView
The chart for WTI Crude Oil illustrates that a local top could have been set for now. A descending trendline started way back in March of this year, and this is now the fourth time that the oil price has tested this trendline. A rejection looks as though it is starting to take shape.
It can also be seen that the oil price is in an ascending channel. While this is helping to guide the price higher, it would be more likely that a breakdown of this channel would eventually be witnessed, rather than a break to the upside. With the oil price sitting on quite good support currently, it now remains to be seen if this support will hold or break down. If it holds, there is the chance that a return to the descending trendline could end up breaching it, while if the support breaks down, the oil price could head back to the bottom of the ascending channel and a possible correction down to $75 or even to $68.
Source: TradingView
The price action for Bitcoin is continuing to evolve. From two parallel channels on top of each other, the price action could now have morphed into a descending channel. The higher highs and lower lows are far more suitably enclosed within this descending channel pattern. That said, the particular angle of the channel may be subject to change depending on what could be seen as the best fit.
Now we have this pattern, it negates the breakdown from the previous parallel channel setup, improving how the $BTC price is currently looking. In the descending channel pattern, the price has just retested the bottom of the channel with a bounce beginning to materialise. It would be expected that unless it breaks back down, this bounce could continue back to the top of the channel and a potential breakout.
Those thinking this could be a bull flag may be disappointed to learn that the flag has come down a fair bit more than the maximum 50% that could be expected for a classic flag. That said, the descending channel has more probability to break to the upside.
Source: TradingView
In the daily time frame the lower trendline of the channel fits better in a wedge-like structure - still quite bullish. The current resistance level at $80,300 is proving a tough nut to crack, just as it was a decent support until recently. It will be a critical task of the bulls to turn this level back into support. $81,300 and then $82,780 will also be important levels to break.
If the $BTC price breaks to the downside and falls out of the wedge, $75,600 will be the next important level to hold in order to prevent the price going back down to $70K.
Source: TradingView
Could the $BTC price rally from here, breaking up through the resistances and the top of the wedge pattern and heading up to $90K? This could catch many retail investors completely off guard, as they wait for the rest of a correction that potentially brings the price back down to $70K and possibly lower.
The Stochastic RSI is displaying a cross back down of the indicators below the 80.00 level, passing a level that would normally signal a descent to the bottom. That said, there still remains the whole week for the bulls to rally the $BTC price and turn these indicators back around.
As previously mentioned, sentiment in the market appears to be very bearish, and many will be betting on a further slide to the downside for the stock market, precious metals, and by extension Bitcoin. Be that as it may, AI stocks could be bottoming, and gold and silver may also be reaching the bottom of their sell-off. Where else could money go than back into the market, and into these particular sectors along with Bitcoin?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
