BTC, NDXT, and DXY at a Crossroads

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Previously, I’ve demonstrated stepping-stone descending horizontal Wyckoff re-distribution trading ranges for BTC. The fact that the BTC price action broke the trading range support to the downside for a sustained period of time supports the notion of a re-distribution trading range. I opened a short position near the trading range support ($41,313). Since then, my first target of $37,400 has been hit. Based on an analysis of the Phoenix Ascending (PA) indicators (bottom panel), I expect an upthrust toward the trading range support followed by downward price movement.

Short position open: $41,313
Take profit target #1: $37,400
Profit/Loss (%): 9.44

Significant bars, which help define important areas of support and resistance, are given by the blue shading. The blue arrows point to volume spikes.

Wyckoff abbreviations: automatic rally (ARa), buying climax (BC), selling climax (SC), secondary test (ST), upthrust (UT), failed upthrust (FUT), last point of supply (LPSY), shakeout (SO), sign of weakness (SO), Phase A (Ph A), Phase B (Ph B), Phase C (Ph C), Phase D (Ph D), Phase E (Ph E).

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ملاحظة

I’ve demonstrated a strong positive correlation between the NASDAQ 100 Technology Sector (NDQ) price and the BTC price, which is not surprising given that many perceive BTC as a risk-on asset (i.e., like a tech stock). As you can appreciate from this chart, the NDQ was in strong up trending environment from May, 2021 through January, 2022. At that point, we observed a significant change in character (CHoCH) of the price environment. Specifically, we transitioned from an up trending environment to a downward sloping Wyckoff re-distribution trading range. Note that the notion that it is a Wyckoff re-distribution trading range is to be confirmed or refuted by future price action. The current price action is observed at a long-term support cluster. A NDQ rally toward the trading range resistance would be bullish for BTC and other risk-on assets. If the long-term support cluster were to be broken by a NDQ reaction then that would be bearish for BTC and other risk-on assets.

Wyckoff abbreviations: automatic rally (ARa), change of character (CHoCH), failed upthrust (FUT), sign of weakness Ph B (SOW Ph B), upthrust after distribution (UTAD). The CHoCH reaction is given by the blue shaded rectangle.

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ملاحظة

I’ve demonstrated a strong negative correlation between correlation between the degree of strength of the US Dollar, as indexed by the US Dollar Currency Index (DXY) price, and the BTC price. The DXY price is currently observed within a long-term resistance cluster. A bearish scenario for BTC and other risk-on assets is the possibility that the DXY price may break above this resistance cluster to all-time highs. A bullish scenario for BTC and other risk-on assets is the possibility that the DXY price may be rejected at this resistance cluster and fall toward the next logical support cluster.

It appears we are, indeed, at a crossroads. Let’s see what happens and trade accordingly.

This is not financial advice. I am not your financial advisor. This is my opinion.