Overview:

Bitcoin is now flirting with the 10,800 level, which is a traditional support and resistance area.  The price action leading up to this level, and future price action will provide better insight as to whether we are forming a solid base around the 9k area.

The S&P is showing signs of topping, which is generally a process not an event.  One way we prepare for a potential broader correction is hedging.

We never want to be completely out of a market, but at times we can use hedging to minimize the pain, or even profit from a potential pullback.

Gold continues to consolidate in the face of a strong US economy.   So what gives here, is this a prelude to a major collapse?

The evidence of a potential crisis is starting to show up with not only many Government Bonds yielding negative, but Corporate Junk Bonds as well.  How does this work?

Well if you came to me and wanted to borrow money for your business, I would PAY you to borrow the money.  Nice road the Central Banks have led us down.

BTCUSD:

Bitcoin is pushing the 10,800 area which is a traditional support and resistance level. Going back to June this is where the final consolidation and breakout happened for a swing to 14k.  Over the last 5 weeks Bitcoin has oscillated around this level which has formed a solid support / resistance level.

So it would come as no surprise to see a pullback from here and actually we are prepared for one.  However, Bitcoin has a history of taking these types of levels out, so there are two outcomes here and you should be prepared for either in the short term.

The 10k level is an important from a psychological standpoint and IF it pulls back to this level, we will see how the market reacts.  Does the market form a reversal pattern here or take it out?

Taking it out would tilt the scales back in favor a potential swing to 8500 or a retest of the consolidation channel.   In my opinion this would be a buying opportunity on a solid reversal pattern.

Finding support at 10k would be a potential setup for a swing or position trade.  This would print a higher low, and Bitcoin would be building up momentum to blow through 10,800.

This type of setup would position well for a push back into the mid to upper 12k area.  Currently I have an adjusted area of 12,500.

Bitcoin Accumulation:

 

Though many are focused on short term triangle patterns on a 1 hour chart, we look for order flow on broader time frames.  The 12 hour provides some evidence that larger operators were accumulating the dip, which evolved as a rounded bottom within the range of 9250-9900.

Rounded bottoms often form as buyers exhaust, and larger operators are just buying into the selling pressure.  Since they are looking to acquire larger positions, and large buy order would move the market, they buy in blocks over a period of time.  The result is a rounded bottom formation.

Whether we break through 10,800 or pullback to 10k we are prepared to act.  It is simply a game of patience right now and not attempting to over trade a market that is still in a range.  Probabilities point in favor of entering the next leg higher once 14,500 is taken out.

In reality we are not fortune tellers, we are just looking at possible scenarios and how Bitcoin reacts at certain levels.  Either way we are prepared, and this is key.  It is not about being right or wrong, but adjusting to your environment and preparing for multiple scenarios.

We emphasize this constantly with our members that markets require a lot of patience.  After all being bias to only one outcome, is a recipe for reacting to when a market does not go your way.  The most patient of investors are Gold Stackers.

Gold:

Long term I am very bullish on Gold, just like Bitcoin.  Gold is a historical store of value and Bitcoin is becoming more adapted as a digital store of value.  I have a median price target of 2600 over the next few years, a low end of 2180 and a high end of 3300-4k.  Again this is over a 5 plus year period.

As Central banks compete for the loosest monetary policy and continue to inflate Fiat currencies, the value of Gold, Bitcoin and other assets like Real Estate will continue to move higher.

Gold Short Term:

In the shorter term, Gold is still within the consolidation range and until 1450-1460 is taken out we remain positioned that we will see another pullback.   We are not going to guess whether it breaks out, we prepare for either scenario.  In the event Gold takes out the 1450-1460 level we will look for continuation or bullish reversals off pullbacks for longs.

IF it pulls back into the 1360-1385 we will look to either add to our inventory, as well as a reversal for the next leg higher. There is a potential long signal here, but the risk is it results in a fake-out for longs which can pull back quickly.

For long term physical stackers there is nothing wrong with adding some here, pulls back add some more.  

S&P:

The S&P gave back four weeks of gains, and we are looking for a corrective cycle rolling into a seasonal low period for the markets.  With earnings and the majority of second quarter economic data out of the way, sentiment will be the determining factor in swings.

We are looking for a consolidation between the 2500 and 3000 area.  Initial support is found around 2850 with our main support around 2700.  Lower support is at 2500 and if we would be an aggressive buyer at these levels. This may take a month or two to unfold, not overnight. 

The reason we are looking at a broader consolidation is two fold.  Uncertainty with global economies and the upcoming 2020 election.  One way we position for a possible pullback is shorting the Q’s or IWM.  This is essentially a hedge against our current portfolio.

Using our options strategy and buying or selling certain instruments we are looking to hedge at the top of the range.

Summary:

We trade multiple markets as it provides more opportunity than trading just one sector.  Trading alts is no different than multiple Bitcoin trades.   There is not always a setup in an individual sector like Oil and energy, or Semi Conductors.  This is why we trade various markets.   Being flexible to multiple markets helps prevent losses through forcing trades.

 

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