Bitcoin is at the top of its sideways channel. It’s a faintly bearish channel but the setup looks promising for now.
It is natural to be bullish at the top of a trading channel in the same way as it is natural to be disconsolate at the bottom. This is why there is a profit to be had by being contrarian. In a situation where noise rules, ie it’s a mainly random trading situation, going again the majority will be profitable because you will by at the bottom of the channel and sell near the top. Fighting the crowd when it is not random and they are right, will lose you money and likely have you trampled under foot by the stampeding herd.
So any sideways trend like we see in Bitcoin can be seen as simply ‘the right price’ plus noise. The bigger the uncertainty the broader the range.
So with that in mind here is the Bitcoin chart
The latest trend, the one we have sat in most of the year suggests the right price for Bitcoin is about $65000 and that because of the range of trading is wide, there is much uncertainty. The trend however is clear.
So lets zoom in.
So the trick here is to call the break out before it happens and of course get it right. Is it up and to the moon or down and back to the $30,000 levels?
Its anyone guess but of course you can poke this trend and look for changes in the character of its progress to try and divine what is going on. Remember my favour technical analysis joke is that ‘charts are perfect for predicting the past’ and with that in mind if you can see the style of a sideways trend has gone from bearish to bullish that’s a useful insight.
So here is another chart.
In this chart we are suggesting the action has been bearish not just in the general downwards tendency but in the overall shape of the action, with the short term trends seeming to be downwards to. The recoveries are sharp verticals which in a trend like this can been seen as bearish too. However recently we have a bullish tendency in the long term trend, a rising wave form punctuated by sudden drops and now we are near the trend ceiling.
As such we should be watching closely because a breakout up should have traders ready to go long if the breakout gets air above the established trend and starts behaving like its broken out from that long standing gravity. Classically you would look for a couple of new ‘all time highs.’ However in any event we are back to a point where a move to another leg up is possible so its time to pay special attention.
Im back to considering a breakout upwards as a 50/50 up from 60/40 against. It wont be long before we know whether we stick to this sideways channel or are off to the races. Of course, if Trump get elected that might be the trigger, because all but the most optimistic crypto followers realise Democrats are very anti-crypto, as is the governmental infrastructure that stands behind them, making a moonshot in the near term very unlikely if the Democrats take the Whitehouse. We will have that outcome soon enough too, so it seems that the election will decide the matter in a few days time.