A blue sweep of the House and the Senate in the United States means that the last two years of the Trump administration could be a turgid affair as far as passing legislation is concerned. Is this good for markets and for Bitcoin?
More certainty in markets?
One outcome of the U.S. midterm elections, with the Democrats taking control of the House and of the Senate, is that the second two years of the Trump administration are going to be extremely frustrating, at least as far as the Republicans are concerned. Any important legislation which is counter to Democrat thinking can be blocked and defeated, resulting in a general paralysis for the rest of the term of the Trump administration.
Be that as it may, the outcome for markets could be a very positive one. Data shows that when an opposition party gains one or both of the chambers in the midterm elections, the stock market generally rises. This is because the government is prevented from making a lot of changes, and therefore the market has more certainty about the future. Bitcoin has always been a beneficiary during these stagnant legislative times.
W pattern to bring $BTC price back inside descending channel?
Source: TradingView
The short-term chart for $BTC reveals how the price fell out of the descending channel but now appears to be attempting to climb back in. A W pattern has formed, and now it just remains to be seen if the pattern can play out, sending the price back into the middle of the descending channel, and up to the intersection between the two parallel channels. If the $BTC price can end up back above the $81K horizontal resistance, and make a higher high, the local bearish trend of the last six weeks can start to change.
A double bottom to change the trend?
Source: TradingView
Has the $BTC price just witnessed a double bottom? When the price made its first ascent and then consolidated back down to the bottom of the lower parallel channel, the first bottom was formed. Earlier on Wednesday the $BTC price came down nearly to that same level, potentially putting in a double bottom. Another great sign that this could finally be the start of the rally back to the $87K high is that today’s descent stopped short and did not make a lower low. Instead, we now have a higher low which could end the bearish trend. If this is the case, the correction all the way from that $87K top has been a healthy one, and there would appear to be no impediment as to why the $BTC price can’t get back into its bull trend from here on in – market perversity not withstanding.
Perfect retest of 50-week SMA – another bull market signal?
Source: TradingView
In the weekly chart the descending trendlines for the channel have been taken out, given the difficulty in making them fit the touchpoints. Even so, we are now able to see with complete clarity how the $BTC price came down perfectly to test the 50-week simple moving average (SMA) . Going by previous bull markets, the 50-week SMA holds as support for the entirety of the bull market. This could be the first test of that support.
It might now be expected that the 50-week SMA starts to slowly turn back to the upside, which could be its new direction for the next two to three years.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
