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Bitcoin is approaching a 10-month downtrend, similar to 2018
A 50% capitulation took place at this point in the last bear market
The U.S. Dollar Index is also in an intriguing position having hit a 20-year high last week
Bitcoin is approaching a downtrend that began with last November’s $69,000 high as it prepares for a likely pullback following last week’s 20% move. There are now parallels with 2018, which for those who experienced it will not be a pleasant thought, while the U.S. Dollar Index is in an intriguing position after an initial rejection at the prior 2002 high.
Bitcoin’s 2018 Parallels
Bitcoin has been in a downtrend ever since the November top, which was confirmed in April:
As we can see, Bitcoin’s price is rapidly approaching this trendline, and with not much room left within the edge once it does, a resolution is imminent. The situation is not too far removed from what happened in 2018, which had memorable results for all who experienced it:
While the downtrend in 2018 didn’t initiate from the December 2017 top, the similarity in the general price action can’t be ignored, and neither can the timeframe – in 2018, the 50% collapse in November occurred 10 months after the start of the downtrend, the same timeframe we’re looking at right now.
On a lower timeframe we can see that a very clear channel has once again formed that Bitcoin needs to break out of to have any prospect of serious gains:
This is not dissimilar to the price action from earlier in the year when a five-week long corridor established itself before the drop to where we are now:
Bitcoin clearly needs to overcome the top of the channel at $24,600 and treat it as support to have any hope of serious gains from this point. Until then we can assume that any bounce should be sold into, and a loss of $18,750 could be bad news indeed.
U.S. Dollar Index Might Steer Bitcoin’s Direction
For a potential steer as to the direction Bitcoin will take, we can look to the U.S. Dollar Index which has been the scourge of all asset markets for many months now. The DXY has been on a tear since May last year, and last week hit the 2002 high of 110, where it experienced a clear rejection:
What matters now is where it finds support. Currently it is treating its prior high from July as support, which suggests that it is preparing for another push through the resistance area. If this is achieved then asset markets, including Bitcoin, will take another hit as 120 is the next area of resistance.
However, if it falls through its current support or rejects again at 110 then this could signal a double top and that the DXY run is over. This could give asset markets room to breathe…for now.
The post Bitcoin Approaching 10-month Downtrend as 2018 Parallels Grow appeared first on FullyCrypto.