Bitcoin Weekly: Bitcoin and the US 2020 Elections
Bitcoin closed the month just shy of the monthly record close set back in December 2017. A crazy week is coming our way with US 2020 Elections due Tuesday, bitcoin will be prone to external factors that can send the king tumbling down to the 12k range, or 11k if things turn sour. However, the long-term outlook remains bullish and a weekly close above $14,000 can lead to the MOON.
- Bitcoin closes October at $13,778, gaining +28% for the month.
- Volatility remains low compared to December 2017 when bitcoin closed the month just a few dollars above our recent monthly close.
- The risk of a dramatic drop, therefore, is somewhat mitigated considering that bitcoin is expected to fluctuate $478/day.
- From a daily perspective, bitcoin was rejected for the second time at $13,800 (resistance).
- The trend remains bullish and strong, but as long as the king doesn’t claim 14k and flips it to support, a consolidation between $12,951 and $13,800 is likely.
Key Price Levels
Weekly Key Price Levels
- Support: $12,951
- Pivot Point: $13,297
- Resistance: $13,800
Monthly Key Price Levels
- Support: $10,752
- Resistance: $14,000
US 2020 Elections and Bitcoin Trembles
This week our analysis is going to be quite different because let’s face it, the US 2020 Elections has a great influence over the performance of financial markets. For example, uncertainty and shocks can cause panic selling across all asset classes as investors are encouraged to liquidate their positions since cash is king during uncertain times. Therefore, we must include as much price levels as we deem relevant for a safer analysis.
The good thing is that volatility remains at low levels when compared to those before the 2018 bubble burst. If volatility remains low, bitcoin is not expected to drop more than $478/day, but again, this week is a special one. Thus, we are going to keep a close eye on $13,297 (pivot point) because if bulls manage to sustain the price above the said level, bitcoin remains within the bullish zone.
Bitcoin’s Bollinger Bands are beginning to contract due to lower volatility. So, if volume continues to decrease bitcoin will consolidate within the weekly trading channel as aggressive price deviation is not expected. But again, we have to keep an eye on key levels since Tuesday’s outcome can take a big toll on bitcoin’s progress. If On-Balance-Volume caves and support (1.651M) are not held, bitcoin’s trend will turn downward and $12,951 must hold.
Bitcoin’s trend remains bullish and with great strength as you can see with the ADX, but short-term momentum begins to take a breather; Notice how the MACD begins to approach the signal line. If the signal line doesn’t hold as support, bitcoin will drop until the price reaches its next speedbump at $12,311 (EMA34). If the latter holds, we expect a consolidation between $12.3k and $12.6k until the faster-moving average (EMA8) approaches the mid-term average (EMA34).
On the bright side, bulls haven’t given up as buying pressure led to two attempts at an important resistance level at $13,800. We haven’t said much about $14,000 or what happens above because there isn’t much price action between $14,000 and $20,000, so odds are if bitcoin manages consecutive closes above 14k the US 2020 Election and Q4 will become background noise and the king can hit $14,500. Until then, keep an eye on buying pressure because if RSI drops below 57 (bullish threshold) it’s likely that bitcoin will drop to lower trading channels and fail to close above 14k. Worst case scenario, bitcoin can drop back to $10,752 where a bottom is expected.
Bitcoin’s outlook remains bullish, but this week poses a threat because external factors can lead to sell-offs across all asset classes. The first step to setting a responsible trading strategy is identifying key price levels. Let’s wait for bitcoin to approach the nearest key price level. If bitcoin drops below $13,297 set a buy (limit order) at $12,951, once support at $12,642 has held, with a stop-loss at $12,642. Your profit target should be set at $13,800. Bear in mind that the strategy is only valid if OBV remains above 1.651 and RSI above 57 since the trend will remain bullish driven by stronger buying pressure. Personally, I would recommend waiting until Wednesday before jumping on any trade.