Bitcoin (BTC) provided a long-awaited breakout on Sept. 7 as BTC price action dashed bulls’ hopes of a recovery.
$23,000 bounce ‘remains likely’, trader says
Data from Cointelegraph Markets Pro and TradingView captured sharp losses for the BTC/USD pair later on Sept. 6, with overnight lows hitting $18,540 on Bitstamp.
The pair hit its lowest levels since June 30, taking liquidity from the July bottom and recovering only marginally on the day.
The price action to the downside followed nearly a week of sideways movement and volatility was nowhere to be seen as market participants gritted their teeth waiting for a breakout to the upside.
In the end, they were left disappointed, but for popular trader Il Capo of Crypto, there was still reason to believe a relief bounce would follow.
“Firstly, the price is currently above the highest daily support (the low of the range, between $18,500 and $19,000)”, plot in a Twitter thread.
“This is where the latest bear market rally started, indicating strong demand here. A bounce from here into the supply zone ($22,500-$23,000) would form a perfect H&S pattern.”
Il Capo of Crypto added that each breakout had been accompanied by declining volume, suggesting that sellers were increasingly having to work against the grain to push prices lower.
“The funding also indicates that shorts are getting caught on each leg down and there is plenty of fuel for a short squeeze”he added.
For this not to happen, the consolidation would have to start below the late June levels near $18,500.
“Summary: $22,500-$23,000 short squeeze remains likely,” the thread concludes.
“Most people are bearish and arrogant but the charts show otherwise. Don’t get too confident with your short positions. I’m still mostly USDT but hedging for this potential move. Time will tell.”
Binance BTC/USD order book data uploaded by the on-chain monitoring resource Material Indicators confirmed that Bitcoin is acting in an area of great liquidity.
DXY gets 120 target after “major fix”
The macroeconomic markets, meanwhile, offered an interesting view of the day, as the US dollar soared.
The US Dollar Index (DXY) hit a new 20-year high at 110.78, which was accompanied by a further decline in the Euro and the Yen, continuing a dire trend of recent months.
For macroeconomist Henrik Zeberg, a brief pullback was not to be celebrated, as the greenback would come back with a vengeance to head for 120, a level last reached in January 2002.
However, he predicted the correction would mean that cryptocurrencies would be “flying”.
IT IS ALL ABOUT THE #DXY
Reversal soon for major correction – swift – before bottom and new painful rally up to my final target of ~120
Correction will last few months and will send Risk Assets flying #equities #crypto etc. = BLOW-OFF-TOP pic.twitter.com/2hs6b5lKIA
— Henrik Zeberg (@HenrikZeberg) September 7, 2022
IT’S ALL ABOUT DXY
A reversal for a major -quick- correction before bottoming out and another painful rally to my final target of ~120
The correction will last a few months and will blow up risk assets
On the contrary, WTI crude hit its lowest levels since the beginning of the year in what the popular Blockchain Backers trading account qualified as the beginning of “the capitulation of oil”.
US stocks opened modestly higher, with the S&P 500 and the Nasdaq Composite Index gaining 0.3% and 0.65% in the first hour of trading, respectively.
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