In this episode of NewsBTC’s all-new daily technical analysis videos, we are looking at the Bitcoin price monthly chart and the DXY Dollar Currency Index ahead of the monthly close.
Check out the video.
VIDEO: Bitcoin Price Analysis (BTCUSD): August 30, 2022
The month of August is drawing to a close with 48 hours left before the monthly candle closes. The month is especially critical for a number of pivotal reasons of which we’ll review in the video and in the text and charts below.
The Terrible TD9 Setup For Monthly Times
Over the coming days, the most significant factor in crypto markets is the looming TD9 Buy Setup. The TD Sequential can be used as a market timing indicator. For a buy setup, you only need to reach a 9-count. But, the signal becomes much more powerful when the series is complete.
It is possible only if the low current price falls below $17,500. Also, it would need to be possible for all-time high resistance to become support and the end of a decade-long monthly trendline.
The perfect TD9 setup will result in the loss of this trend line. Source: TradingView.com.| Source: BTCUSD on TradingView.com
Is There a hidden bullish divergence that could save the day?
Bitcoin price continues to rest on the lower Bollinger Band – a first for the first ever cryptocurrency on the high timeframe chart. What we don’t want to see is price action close outside the lower band, which could lead to an explosive down-move.
There are signs, however, that there could be a bottom. The monthly momentum on the LMACD histogram and Relative Strength Index could be signaling a hidden bullish divergence. Stochastic is also nearing a turning point after reaching oversold conditions – another recurring bottom setup, especially when combined with a breakout of a downtrend resistance line.
Does this amount to a bottom?TradingView.com - Source: LTCBTC | Source: LTCBTC on TradingView.com
Oder Will the DXY defeat BTC Bulls Again?
Dollar is only half the BTCUSD trading pair. The BTC-USD trading pair is vulnerable to dollar strength.
The best way to gauge the strength of the dollar is through the DXY – the dollar currency index – which is a weighted basket of top world currencies trading against the dollar. The DXY, which is similar to Bitcoin’s price action, is in oversold territory with a potential hidden bullish divergence. It is also potentially forming a bearish diversgence on the same indicators as RSI and LMACD.
Is it possible that dollar bears are waiting to strike when the opportunity presents itself?TradingView.com: Source: LTCETH | Source: LTCETH on TradingView.com
Comparison of Currencies: What is Bitcoin and what’s the dollar?
Dollar strength may explain the similarities between the bear markets of 2014 and 2015. The last time the DXY was this overbought was during what’s known as crypto’s worst bear market ever.
Plotting BTCUSD behind the DXY we can take a closer look at the possible correlation – or anti-correlation. It was the last long-lasting up-move of crypto’s DXY that led to such an extended bear phase. The Bitcoin chart at points seems to act as both dynamic support and resistance for DXY. This could be a sign of an anti-correlated relationship between the trading pair and the DXY.
Bitcoin bottomed every time DXY moved above the BTCUSD plotline. DXY downmoves are when bear markets occur. Bitcoin does well when DXY goes sideways and falls best. The DXY could be at an oversold level on the monthly timeline. A pullback, or even a complete trend shift that lifts Bitcoin out its bear markets may occur.
Bitcoin worked well as a dynamic support/resistance for the DXY charts | Source: BTCUSD on TradingView.com
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Featured Image from iStockPhoto. Charts from TradingView.com