Bitcoin Daily Price Forecast (11/3/20) - Doji Candle: US Election to Spark Trend Reversal?

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Bitcoin went back and forth on Monday to kick off the week, swinging wildly in both directions before settling just under yesterday's close to form a decently-sized doji candle. This usually indicates a neutral market direction and often indicates the end of a trend and a possible trend reversal.

(November 2, 2020 8:00 PM EST)

Outlook: Bitcoin pulled back a hair on Monday, both rising to a new local high and falling nearly all the way back to $13,000 before settling for a negligible loss on the Daily chart, closing just north of the $13,500 level. I think Bitcoin is nearing the top of this microtrend right now, finding some resistance closer to the $14,000 level and the top end of the ascending channel. The time has come; the US Presidential election is tomorrow, and with fear, uncertainty, and doubt rising by the minute, markets and investors are on edge, unsure of the results and subsequent market implications. I think it's more likely that Bitcoin, along with other markets (like gold) are due for a mean reversion this week, which many will say is because of the election (but markets like to 'react' to external events) but is rather more of a measure of market sentiment. Market psychology is a powerful force, which is what makes them so interesting and difficult to navigate. Bitcoin is very much in an uptrend and I think it's reckless and uninformed to sell in the near-term, let alone short, but any pullbacks are a buying opportunity. 

We are still in that time of year where seasonal liquidity is low and volatility is high, so markets are susceptible to wild swings in either direction. Bad news stemming from the election, COVID, civil unrest, terrorist attacks, trade wars, or any other matter could be the spark needed to send this market spiking down alongside equities, gold, and 10 Year Yields. While I portend Bitcoin still maintains some degree of positive covariance to legacy markets during liquidity events; which we may be about to experience; Bitcoin will likely be somewhat more resilient in selling action and should rebound more strongly, even decorrelating a few weeks thereafter. 

Support: I think it makes a lot of sense that Bitcoin pulls back to previous resistance around the $12,000 level, dipping possibly as low as the $11,000s. That would make for a clean test of new support/former resistance and a healthy reset before resuming the uptrend to higher highs in Q4. Areas of note are $12,000, the 50 Day EMA around $11,500, and $10,000 which is both major psychological support and the 200 Day EMA.

Resistance: I think Bitcoin is carving out a new range in which case $14,000 is the new point of resistance. I think we'll see some very choppy price action over the next few weeks, so look for swings in both directions, though my very short-term bias is to the downside for an Election/COVID-induced pullback before the buyers step in and we test $14,000 again. After that, I don't think $15,000 is a major resistance level, so anything above that I think is a slingshot to $20,000.

 

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