Inverse Signals: Why Bitcoin Weakness Is Attributed To Dollar Strength
22 Novembre 2021 - 10:39PM
NEWSBTC
Bitcoin price is currently on the ropes, potentially about to lose
support at around $56,000. But could the recent weakness in the
cryptocurrency market be more a factor of a strong dollar? TD
Sequential Triggers Anti-Correlated Signals On BTCUSD, DXY Weeks
ago, we posed the question if or not the Dollar Currency Index
making new highs in 2021 was a dangerous situation for Bitcoin.
After more than $10,000 per coin was wiped off the price of BTC,
the answer was a resounding yes. But much like the cryptocurrency
uptrend in late 2020 and early 2021 came to an abrupt halt, even
the dollar’s short-term destruction must at some point come to a
full stop. Related Reading | 10 Bullish Monthly Bitcoin Price
Charts To Start November The potential for a reversal is here,
according to the TD Sequential – a market timing indicator created
by Thomas Demark. The idea behind the tool is that after a specific
sequence of candles is made, conditions are met for a reversal.
Such conditions are typically indicated by a 9-setup, or a
13-countdown. However, the 8th candle before the 9 can also yield
such results, and truly the tides can change at any point – the
tool just highlights when that is most likely to occur. In
the chart below, both Bitcoin and the DXY have opposing signals –
making the probability for a reversal in each asset all the more
likely. Inverse TD setups could spell reversal | Source: DXY on
TradingView.com Bitcoin Weakness, Dollar Strength In the chart
above, there are some important things to note that might suggest
the reversal isn’t quite ready. For example, the DXY hasn’t
“perfected” its 9-count. Meanwhile, Bitcoin price is only on an
8-count, yet has been perfected. A count is only perfected when the
final candle of the series has surpassed the rest of the sequence.
A perfected setup is still not a guarantee of results, but
increases the chances of success even further. Bulls take the
stairs up, bears take the elevator down | Source: BTCUSD on
TradingView.com Bitcoin price is also not in danger of a larger
reversal, until the uptrend support has been broken on the daily.
The stair-stepping pattern above would be broken with a close below
$54,000 – such step-like patterns weren’t violated during past
uptrends until they were confirmed to be over. Related Reading | Is
The Dollar Index Making New 2021 Highs Dangerous For Bitcoin? The
reason for the dramatic downside in Bitcoin post-new highs being
made, very well could be due to strength in the dollar, and less-so
weakness in the first ever cryptocurrency. The last time Bitcoin
price reached such levels, the dollar was valued at far less by
comparison using the DXY. With the DXY making a comeback, the king
of cryptocurrency isn’t looking quite as strong as it once was. The
point of the article, however, is to highlight the count on the TD
Sequential on both assets, which could make this shift in strength
and weakness a very short-lived trend. Follow @TonySpilotroBTC on
Twitter or join the TonyTradesBTC Telegram for exclusive daily
market insights and technical analysis education. Please note:
Content is educational and should not be considered
investment advice. Featured image from iStockPhoto, Charts from
TradingView.com
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