Range lows swept followed by a bullish impulse fueled by news from China
As I suggested in the last weekly update, Bitcoin formed a tight range on the weekly and given that the range highs were swept I anticipated a subsequent sweep of the range lows which we also got and it was followed by a massive daily candle which was fueled by Xi's announcement about embracing blockchain technology. My target lows that I'd been calling for months were hit (well, $100 short) thus wrapping up my bearish calls for the timebeing. So now that range lows were swept and we got Bitcoin saw a $2,200 move, what's next?
I won't spend too long on the weekly chart but I mainly wanted to call out the range low sweep which I discussed in the prior weekly update. We can see Bitcoin went below the $7,625 level and came just shy of the $7,250 region that I'd been calling for months now. I did add some in the $7,400's and closed all my shorts sub-$7,500 but definitely didn't get the chance to add all the spot I wanted unfortunately. Price then rocketed back into the range, reclaiming the monthly and then closing above the range high but wasn't quite able to close above weekly resistance. Consolidation here or a close above $9,600 and I think high $10,000's could be in play. If price does head south from here, the prior weekly range will be key - if $8,750 acts as support it will be a fantastic entry, if price close back inside the range it would make sense that range lows or at least the mid-level around $8,200 gets re-tested.
The daily chart is where I really want to focus for this week. We can see clean breakouts from a number of perspectives - OBV downtrend, the two downtrend lines from previous highs, the range high of $8,750 and the major $9,350 which acted as support for months before the breakdown to below $8,000. All of these signs mean that my bearish bias is long gone and I'll be actively looking for long opportunities rather than shorts. The first level to watch is that support range from $9,100-$9,350. This level was huge for months and now has confluence with the breakout of downtrend and therefore I'll actively be longing this area until it no longer acts as support. If it does give out, $8,750 is a very attractive area for longs and I won't consider any bearish scenarios unless we close back below that level. In terms of resistance it's worth noting that that $2,000+ move was ultimately rejected by the $10,600 resistance which was a key pivot when Bitcoin was trading higher from July to September. Price is also finding resistance near $10,000 which is both a psychological level and is the location of the last daily bounce before price dumped into the $8,000's. Technically speaking, Bitcoin will still be posting a lower high until that $10,600 level is taken out and therefore we can't rule out bearish continuation but as long as $8,800 holds my bias is firmly bullish.
Support: $9,100-$9,350, $8,750
Resistance: $10,000, $10,600
Ethereum had a strong reaction after tapping the weekly $155 level for the second time and proceeded to hit the weekly range highs within the same candle. It obviously didn't have quite the move that Bitcoin did but I'm certainly leaning bullish and if it can regain the $200's I think ETH can see significant movement. I'm building a position in the $170's-$180's but the safest play is to wait for it to regain the range highs.
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