Methodical Trading - Volume 5 - "Scenarios, Stimulus, & Election"
Bitcoin Analysis, Gold, U.S Dollar, Stimulus Progress, Election, & Bad News Bitmex
Bitcoin has been trading sideways with a relatively small amount of volatility the past week. As Gold approaches resistance once again, talks of Stimulus continue to progress. The U.S Presidential election is less than a month away, and Bitmex encounters legal issues with the CFTC.
In this Volume of Methodical Trading, we will be looking into a few key charts before diving into the current fundamental events that are occurring today. While Bitcoin has not made any large moves recently, it’s possible that a high volatility break will be occurring soon.
I would also like to give a shoutout to two of our sponsors, Utrust and LID! First, Utrust is an amazing company that allows e-commerce businesses to accept crypto currency as a form of payment with seamless integration. They have an entire platform that has an easy to use interface and is incredibly user friendly. You can also download the Utrust Wallet App today on the Apple or Google Play Store. It cointains projects such as Utrust that will help facilitate e-commerce businesses into accepting Crypto Currency as a form of payment and allowing the sector to grow as a whole. Please feel free to check out their website here at utrust.com and greatly consider utilizing their platform in an e-commerce business!
Secondly, the Liquidity Dividends Protocol (LID) provides solutions for depositing Liquidity into Uniswap. For those interested in Uniswap, I highly recommend following this project and the roadmap they have set forth. LID currently offers Staking, Certified Presale Applications, & Social Referrals as well. You can read more about their project directly on their website HERE. You can also follow them on Twitter by clicking on the link below.
Talking Points
Bitcoin Synopsis
Gold
U.S Dollar
Stimulus Progress & Election
CFTC & Bitmex
Bitcoin Synopsis
Looking at the Daily here for Bitcoin, price has entered consolidation within this triangle. Scalping within this triangle is possible, but not something that I am personally trading at the moment. Currently, the only two scenarios in mind are a breakout or breakdown of the triangle itself.
Bullish Scenario
The Bullish Scenario here would be looking for a move back towards $12,000. A breakout above the triangle followed by a retest would signal an entry for Long positions. Given the extreme consolidation taking place, volatility is expected to follow, so it is possible that price would not give a retest and may simply shoot up instead. Right now, there are no other intra-day scalps that look appealing to us. Playing the breakout or breakdown is the easiest method of approach here.
Bearish Scenario
This breakdown on Bitcoin would trigger an entry for Short positions. The 200 Daily EMA (Green) would likely meet near our $10,000 support, where price has previously managed to find ground. Price was bought back aggressively in the first week of September and should see a decent bounce if price were to visit it again. A breakdown below this region would likely see lower prices towards $9,200. For now, it is easier to take these regions level by level.
Gold
Gold currently sits at a daily resistance level, with a previous Swing Fail Resistance trendline approaching. This move up into our resistance level is a Bearish Retest from a technical perspective, and Gold currently has a Bearish Market Structure of lower highs and lower lows as of August. Price needs to break above the horizontal resistance, along with breaking the Swing Fail trendline above before we can assume continuation of our Bullish trend. If price can blow past these two resistances, then a move back towards $2,000 should be expected. If price fails to break these resistance levels, then a continuation of our current downtrend should be expected, potentially leading to another lower low.
U.S Dollar
Discussed in Volume 4, it appears that the Descending Broadening Wedge is valid here for the U.S Dollar. Price is currently attempting a perfect retest of the upper trendline. If we hold this level as support, then a visit towards $95.70 may be in play. While the charts show a short term bullish pattern, it is also worth noting that stimulus talks within the U.S slowed down over the past month. Only recently did the U.S begin to make progress and get closer to making a deal for Americans. If a larger stimulus bill is passed, then the news could negatively affect the price action currently taking place. A stimulus deal is anticipated to be reached before the upcoming election day.
Stimulus Progress & Election
It seems that every morning, members of the house continue to state that progress is being made in regards to Stimulus and relief brought to the American people. While the repeat headlines continue to take place, most are confident that a deal should be reached soon. The current deal, which stands at a whopping $2.2 trillion dollars, would provide another round of Stimulus checks along with $600 weekly unemployment benefits. You can read more on the stimulus package itself HERE.
If a confirmed deal were to take place, then it would be difficult to argue that the U.S Dollar can continue reversing the current downtrend. The amount of inflow into the economy with massive amounts of printing would likely move assets like Gold and Bitcoin up while pushing the Dollar itself down.
The U.S Election is also 28 days away from time of writing. In regards to the Stock Market, Bitcoin, Gold, etc. what does this mean? Over the Long term… probably nothing. As the years go on, long term investors have always been rewarded. Regardless of who gets elected, taking a macro view and approaching it on a longer term scale has always been favorable. However, in the short term, markets tend to dislike uncertainty. As we move closer to election day, volatility should be expected in Stocks, Bitcoin, & Gold. This also lines up with the resistance regions and consolidation we are currently seeing in the charts mentioned above as well. A breakdown/breakout will likely take place in the coming weeks across these charts as the election moves closer.
On another note, if you are eligible to vote in this election… Please do your part and go vote!
CFTC & Bitmex
A few days ago, it was announced that the CFTC sued Bitmex due to the offering of their services to U.S individuals. Shortly after this was announced, Bitcoin fell a mere 2%. The legal issue here does not necessarily fall underneath Bitmex alone. Other exchanges that are able to be accessed by U.S Individuals without KYC are not out of the woods either. Bitmex is likely only the beginning of what is to come. This exchange is not alone here when it comes to the CFTC, and other exchanges should be prepared for lawsuits as well so long as U.S Individuals are able to access their exchanges without proper Know Your Customer regulations.
Please note that this newsletter is NOT Financial Advise. Neither Methodical Trading and/or it’s associates should be considered Financial Advisors. Any and ALL related Market centric material should be considered educational content for entertainment only. Methodical Trading and/or it’s associates are not responsible for any financial endeavors an individual/group chooses to take.