Bitcoin ‘6-8 weeks’ from breakout as Hang Seng echoes Lehman Brothers dip

Bitcoin ‘6-8 weeks’ from breakout as Hang Seng echoes Lehman Brothers dip

Bitcoin (BTC) was awaiting signals at the October 24 Wall Street open as expectations for a breakout ran high.

BTC/USD 1-Hour Candlestick Chart (Bitstamp). Source: TradingView

The Hang Seng has fallen the most since 2008

Data from Cointelegraph Markets Pro and TradingView tracked a mundane trading day for BTC/USD after the pair hit weekly highs of $19,700 overnight.

Despite what Michaël van de Poppe, CEO and founder of trading firm Eight, called “much worse than expected” production data from the US, Bitcoin suffered a falling trajectory on the day.

This led chain analysis resource Material Indicators to suspect that the resistance would remain in place.

“Sunday BTC failed all attempts to regain 2017 peak,” it said, summary last 24 hours price action according to their proprietary trading indicators.

“The change in the path of the Trend Precognition’s A1 slope line after the D and W close indicates a loss of momentum. The price is currently stuck between the 50-day MA and the trend line awaiting the TradFi open.”

Van de Poppe, meanwhile, set selling levels to hit $19,600 and $20,700, adding that the US dollar and US bond yields “are showing some weakness.”

“Upward momentum wanes on bond yields,” the popular trading account Game of Trades continued.

“When this happened last time, the markets went on a big run.”

Nevertheless, macro markets were giving clearer signs of volatility to come, particularly in Asia, where Hong Kong’s Hang Seng saw its biggest daily drop since the Lehman Brothers implosion in 2008.

Hang Seng Index 1-day candlestick chart. Source: TradingView

Game of Trades in the same way considered S&P 500 as a potential source of a “massive move” with increasing volatility.

See also  What I Did to Fix My Bitcoin Loan - Bitcoin Magazine
S&P 500 volatility annotated chart. Source: Game of Trades/Twitter

“Major Expansionary Movement” May Be Months Free for BTC

For Bitcoin, volatility can be a long time coming, as a classic indicator delivers signals that have only been seen a handful of times before.

Related: Least Volatile ‘Uptober’ Ever – 5 Things to Know in Bitcoin This Week

As noted by Filbfilb, co-founder of trading suite DecenTrader, Bitcoin’s Bollinger Bands continue to contract on weekly time frames, reaching rare levels.

“The outcome of each example is obviously a big expansionary move,” he told Twitter followers on the day.

“The funny thing is that in each of the examples, BTC spent 6-8 weeks tightening further from the breadth level we’re at now, before a big expansionary move, so I’m afraid there’s a good chance this thing will end up further.”

BTC/USD Comparative Annotated Charts. Source: Filbfilb/Twitter

Whether up or down, Bitcoin’s current rising correlation with gold was something to note, Charles Edwards, founder of asset manager Capriole, added.

“Bitcoin bottoms often coincide with high correlation to gold. We have that today,” he declared alongside a comparative chart of previous such periods.

“It’s much better when Bitcoin is correlated to gold. Unlocked.”

BTC/USD vs. gold correlation annotated chart. Source: Charles Edwards/Twitter

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trade involves risk, you should do your own research when making a decision.