Bitcoin rallied sharply on Monday, kicking off the week with a bang, surging about $400 to end the day over $11,700. This is a bullish engulfing candle and, among many other variables, suggests Bitcoin is ready to move higher.
(October 19, 2020 8:00 PM EST)
Outlook: Bitcoin broke higher Monday in a strong bullish candle, breaking above the $11,500 level that offered some resistance last week. Bitcoin closed the day near the highs, suggesting it's still got gas in the tank after today's price action. This sets up what could be a strong week for Bitcoin ad gold continues to hang in there amid equity weakness in the past few trading days, although Bitcoin's strength here shows its resiliency and negative covariance to traditional assets during certain times. (This is worth exploring further, but we'll dedicate an entire analysis post on that). The chart above is exceptionally bullish; if Bitcoin can break above $12,000, then I think there will be even more tailwind than there is right now, which is quite a bit and growing. I'm a buyer on dips; DCA is still a winning strategy and has proven to be, so why not? With the US Presidential Election 15 days away, I expect increasing volatility and sensational news headlines causing market turbulence, so be prepared for wild intraday swings. That being said, any sharp drop is not necessarily bearish and could just be the algos trading based on headlines. This is when it makes sense to set staggered limit buy orders at lower support levels:
Support: Look for support below at the $11,000 level which is near the 50 Day EMA around $10,908. This area, formerly resistance, should act as new support for BTC. Below that is support at the $10,000 level, and then the 200 Day EMA just below there at $9,756.
Resistance: I was looking for an impulsive candle above $11,500 and we got it. Now, I'm looking at $12,000. After that, I don't see a ton of resistance between there and $20,000, so it might come quicker than most expect. Gold continues to shed off weakness; I expect Bitcoin reacts slightly more bullishly than that.
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