The days fly by. It’s been 7 days since big red candles caused a new low. Since then, the price has not fallen below $ 15,400, and further downward movements are not forthcoming.
In today’s analysis, we discuss what the next move for Bitcoin is. First, let’s take a look at the resistances and supports. Then we look at the stock index of the 500 largest US companies, which shows us that the chart may not be colored red enough yet…
The supports and resistances
For a future movement, it is always important to be aware of the supports and resistances that the Bitcoin price has.
We start with the resistors. Right now, the price is testing the descending red line. This line has been tested several times in recent weeks, but each time this resistance turned out to be too great. If we see a breakout in the coming days, then the $ 17,600 is the next resistance. This is the price level of the low point formed on June 18 of this year.
The upper resistance line is a very tough one, because this line has often been tested as support in recent months. As you may know, a major support turns into a strong resistance. There is no doubt that the price will have a very difficult time breaking out above this.
Still, there is always a chance that Bitcoin’s downtrend has not yet come to an end. That is why it is always good to know the supports that can halt any future decline.
First of all, the green box that has been successfully tested a number of times as support. So far this is going well, and that could result in a nice upward movement being realized. However, you should not expect too much from this box. Namely, the price level has seen almost no price action in Bitcoin history.
Suppose Bitcoin ends up in a downward movement again, then it is better to look a little lower. 12% lower is a support level that does see a lot of price action: the $13,800.
What is the outlook for the S&P 500?
In the August 26 analysis, I compared the current trend of the S&P 500 to 2008. At the time of writing, the price was forming its third peak: the third trendline rejection. Soon we indeed saw that the price continued to follow the trend of 2008 (price in blue). A lower low followed, followed by the final rise.
I do call it a last rise, but of course that is only the case if the price continues to follow the 2008 price action. We see that this increase was followed by a gigantic decrease …
How does this affect Bitcoin?
As you may know, the S&P 500 and Bitcoin have a strong correlation. If the stock index chart is colored red, then that is often also the case with Bitcoin. Suppose the stock index continues to follow the price action of 2008, so there will be a big drop in the coming weeks, then this will certainly have an effect on Bitcoin.
Getting back to the supports, the $13,800 level will be important here. In addition, the 11,500, and if it gets really colorful, the $ 10,000 level. Of course, the price of this stock index never moves exactly the same as a few years ago. The economy and circumstances are a lot different. Still, we should be aware that a scenario like this is on the table and it will be dramatic for Bitcoin…