The S&P 500 fell 1.5% on Thursday, taking the Index back to rest on the top of a 4.5 year channel. Will the Index break back inside and crash to the bottom of the channel, or is a bounce abou
The S&P 500 fell 1.5% on Thursday, taking the Index back to rest on the top of a 4.5 year channel. Will the Index break back inside and crash to the bottom of the channel, or is a bounce about to take place? The price of Bitcoin probably depends on the outcome.
Source: TradingView
The weekly chart for the S&P 500 gives us a fairly precise idea of where the index could go. Currently sitting at a little over 7,300 points, the index is based on the top of the multi-year ascending channel and the 0.236 Fibonacci level.
If the index level falls back into the channel, the very accurate Fibonacci lines provide an excellent idea of how far down it could go. The main area of support is the 5.0 Fibonacci at 6,970, while a bit further down at 6,800 is the golden 0.618 Fibonacci level.
Could the index go all the way down to the bottom of the channel at 5,000 to 6,000 points? There is always that possibility. That said, the weekly Stochastic RSI indicator lines are reaching the bottom. There is usually a bounce.
Source: TradingView
Given that things are very much in the balance for the $BTC price, what the U.S. stock market does after the open on Thursday is likely to have an effect on Bitcoin.
As things stand in the short-term time frame, the $BTC price has fallen through the neckline of the bearish head and shoulders pattern, and has come back up to confirm the breakdown. It’s now going to be a case of waiting to see if the measured move down to $60,700 will play out. Looking left along the chart, this exact level happens to also be a decent support line.
For the bulls to win out, the price would have to break back out of the channel, push up through the head and shoulders neckline, negating the pattern, and then up through the major $65,600 horizontal resistance. This would be a tough route to take.
Source: TradingView
The daily chart shows that the $BTC price is still quite close to the major $65,600 horizontal resistance level. The Stochastic RSI indicator lines in this time frame are posturing to cross back up. Could this soon be to signal the price momentum that pushes the price up through the resistance?
The RSI illustrates a wedge pattern that has contained the indicator line since early June. A bounce from the bottom of the wedge could coincide with the bounce from the Stochastic RSI.
Source: TradingView
The sideways price action continues. The $66,600 horizontal resistance remains the level to break. As the $BTC price tracks along in that lateral movement a break to one direction or the other becomes much more likely.
Space for the price to move sideways is diminishing. In fact, if the 200-week SMA and the bull market trendline hold, a break to the upside looks probable by next week - if the support structures hold of course.
Nevertheless, until there is a trend change, Bitcoin is still in a bear market. There is also the possibility that the $BTC price breaks down from here. If the U.S. stock market does crash, this would be an appropriate time for Bitcoin to find that potential final bear market low.
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.
