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?
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.
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.
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.
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I’m Tony Spilotro. Behind the pseudonym, I’m a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck – literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn’t yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can’t yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.
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Inverse Signals: Why Bitcoin Weakness Is Attributed To Dollar Strength – NewsBTC
