Is Bitcoin Preparing For A Big Move?

Bitcoin is currently in a bearish consolidation phase, coiling up for a big move that appears to be to the downside -- but in this market, be prepared for anything. We see a descending triangle between the support around 18500 and the long-term downtrend line (in blue).

A decisive breakdown through support is more likely after the lower high on Sept. 13. Confirming the bearish move is the consecutive lower highs being put in on the following daily candles as prices made their way back down to the bottom of the support.

We are now consolidating between the 20600 resistance and the 18000 supports, and until we see a break of that, I’m staying out of the trade.

In volatile times like these, it is best to go back to the basics of trading (always giving priority to the story of price action and volume), wait for confirmation, and keep a few helpful indicators on hand to give that extra bit of assurance that you are trading the direction the market wants to go.

When you start seeing consolidation like this, your mind should immediately go into a state of patience, waiting for the market to tell you what it wants to do. The easiest way to lose money in these volatile markets is to try and take preemptive trades. Wait for the confirmation, take appropriate position sizes, and stick to your plan.

We’ve also seen a high correlation between SPY and BTC over the past few years, so it’s crucial always to be mindful of S&P 500 and the Federal Reserve monetary policy's effect.

Currently, the Fed is making money more expensive to borrow, and they are reducing their purchasing of Mortgage Backed Securities (MBS) – both very bearish things we need to be aware of.

SPY is well below the minor uptrend line, and the next supports are the previous pivot lows around 371 and 362. A break below 362 with volume will inject selling pressure. They’ve become so correlated that you can’t trade BTC effectively without keeping a pulse on the SPY.