Bitcoin Technical Analysis and the Most Ominous Chart in Finance

When viewing Bitcoin on the weekly chart above, there are still bullish indicators for the rest of the week. If Bitcoin can break above the critical resistance level at $4.2k, then there is a high probability the bulls will drive price up to $4.6k or even $5k with the 128 MA (green) acting as strong resistance. According to the TD Sequential indicator, Bitcoin is on an 8 of 9 candle on the weekly chart above. Therefore, next week’s close will create a 9 candle which means there is a high probability a trend exhaustion or possible reversal pattern will occur.  

The TD Sequential indicator on Bitcoin’s daily chart (below) is on a 5 of 9 candle. If Bitcoin reaches a 9 candle on the daily chart by the end of the week this could lead to a short-term high of roughly $4.2k. Moreover, a pull back would likely occur before any breakout to the $5k level. If the daily chart makes a 9 candle in a weekly 9 candle, then there is a high probability a trend exhaustion leading to a tentative pullback will occur.

Below is the yield curve which many investors and economists consider to be one of the most ominous charts in finance. An inverted yield curve has accurately predicted the majority of recessions over the course of the last 25 years. Once the yield curve becomes inverted, a recession usually follows within the next 1-2 years. Chart source available here.

What could this mean for Bitcoin? We don’t really know. There are two schools of thought when it comes to the effects a recession would have on Bitcoin:

A bearish perspective would argue a recession forces individuals and institutions to borrow less and embrace risk-off investment styles. Bitcoin and many other tech stocks are most likely to be considered risk-on investments, which would discourage investors from driving the price of Bitcoin to new all-time highs. 

The bullish perspective would argue a recession comparable to 2008 would only reinforce Millennial’s distrust in the traditional banking and financial system. This may lead them, as well as older investors, to flock toward assets such as Bitcoin and gold in the opinion that these commodities will serve as a hedge against the traditional banking system. 

While there may be merit to both arguments, at the end of the day no one knows how a global recession would impact Bitcoin. After all, Bitcoin has never existed under such conditions. 

Disclaimer: Nothing in this article should be considered financial advice. Please make objective decisions and do your own research and due diligence. The author of the article owns Bitcoin.