Oil pulled back significantly on Monday and a rally in the U.S. 10-year government bond yield was snuffed out quickly. Nevertheless, the stock market continued to fall, with AI stocks still descending. Gold, silver, and Bitcoin are in line with the downward trend, all seeking to find a bottom. Where will it be for Bitcoin?
Oil pulls back from the breakout
Source: TradingView
The WTI Crude Oil chart shows that the oil price was rejected from a descending trendline in place since early March . That said, the price is trading within a triangle pattern which must break soon. Whether this is to the upside or downside will probably depend on how the US/Iran conflict plays out after the US midterm elections. If the war breaks out again in earnest, a breakout towards $120 could occur, while if a recent softening of US/Iran relations is maintained, and the Strait of Hormuz can reopen, a breakdown towards $75 could happen. Whatever happens, the chart tells us that it will take place by the end of this month.
10-year bond yield back under 5%
Source: TradingView
The chart for the US Government 10-year bond yield reveals that the yield rose rapidly back to 5% earlier on Tuesday before getting smacked back down again to the strong support at 4.9%. As can be seen in the chart, this lines up perfectly with the 0.618 Fibonacci level. If, and perhaps when this level breaks down, the bond yield could move down to the full measured move out of the head and shoulders pattern. Once there, or even before, momentum indicators suggest that the yield could rise again. This is just a correction. Be warned that rising bond yields are not going away yet.
Breakdown confirmed – will support hold?
Source: TradingView
The daily $BTC chart tells us that the price has broken down out of the descending channel , but that it has found support at the $76,340 horizontal support level, and is still well inside the parallel channel. The $BTC price has returned to confirm the bottom of the descending channel as resistance, so it is now a case of waiting to see if the current support fails and whether the bottom of the parallel channel will hold. Failing either of these two options, if the price regains the descending channel, the top of the parallel channel at $81,200 would be the target.
Support levels in the weekly chart
Source: TradingView
The weekly chart gives us a view on where the $BTC price could possibly descend to. We have two green boxes. If the price falls and confirms below the upper box, the price would probably collapse to the lower box given that there is little support between the boxes.
Firstly it needs to be noted that where the $BTC price is now, at the top of the upper green box, there is very strong support. It may well be that this support is enough to provide the necessary base for the next upward leg.
If this support does not hold, the bottom of the parallel channel is next, buttressed by the 50-week SMA , and then the bottom of the green box at $73,800. After this the collapse would be on. $69K is a massive level, given that it was the top of the 2021 bull market. Below this is the rising bull market trendline, and very strong support at $66K.
The current level at $77K is possibly favourite to stop the rot, but be aware that the price could be coming down to the neckline of a head and shoulders pattern before rising to complete the right shoulder. The breakdown move for this pattern would be to $64K. On the other side of the coin, a simply massive inverse head and shoulders is also in play that could push the $BTC price up to at least $116K!
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.
