Issue #7 | Calm Before The Storm

A massive move is on the horizon, but when?

Welcome to issue #7 of CoinChartist (VIP). This week’s drop includes:

• The latest Bitcoin updates

• Macro charts on the VIX, DXY, and Nasdaq

• An explosive altcoin update featuring Litecoin, Ethereum, & XRP

• A lesson on setting up volatility trade filters to avoid boredom and chop

Please subscribe for premium and support CoinChartist.io, or share CoinChartist (VIP) with friends and family. You can also follow CoinChartist on YouTube and Twitter. Don’t forget to also like and comment to let us know how we’re doing.

Sometimes, less is more. So in this segment, we are using very few lines or indicators in our Bitcoin analysis

BTC CME futures can offer technical signals that differ greatly from spot charts. Since the Chicago Mercantile Exchange closes over the weekend, gaps can be left in the BTC!1 chart. In Japanese candlestick analysis, gaps are called falling or rising windows, which can act as support or resistance. The chart above shows a former rising window acting as support for current price action. A downward resistance line is compressing price against support, and soon one line will break. As long as BTC doesn’t make a lower low below $19,400, an uptrend remains fully intact.

Learn more about Japanese candlesticks here.

Here is a compelling classical chart pattern with just one horizontal resistance line being retested as support. The same support line from the above rising window, is also the neckline of a year-long inverse head and shoulders pattern. If the throwback holds, the target is well into $40K per BTC.

Learn more about chart patterns here.

Support and resistance lines don’t have to be horizontal, or straight lines at all. Moving averages and other indicators also act as dynamic support and resistance levels that move with price action over time. BTCUSD weekly is retesting and currently forming a hammer candlestick at the 200-week moving average. Although the level was lost in 2022, in the past it worked as an ironclad bear market bottom. Will it hold now?

Learn more about support and resistance levels here.

This week’s theme is all about low volatility, which typically means strong volatility is on the way. Let’s begin the macro section of the report with the VIX, which has been making news lately for it being the lowest in years.

The chart above plots the VIX above BTCUSD to look for anti-correlated movements between them. A visual inspection shows that if the VIX is softening, Bitcoin is rallying. However, as the VIX spikes, crypto craters. The so-called “Fear Index” appears to have a strong impact on Bitcoin, and its currently falling to its lowest levels since 2019. Falling lower than that, led to the historic 2017 crypto bull market. Remember this particular point for the altcoin section, and be reminded that VIX stands for Volatility Index.

Experimenting with the ratio between BTCUSD and the VIX, the BTCUSD/VIX chart looks much more bullish than standard Bitcoin charts trading against the dollar. Monthly momentum has crossed bullish, and the ratio is up against resistance and looks ready to push higher.

It is imperative that the dollar follows along and allows crypto and other assets to display strength. Turning to high timeframe candlesticks, the DXY is forming a doji after a shooting star in the last candle. With 21 days left for the 6M candle to close, if the DXY can fall below 100 an evening star reversal pattern could complete, and signal a larger move down in the following candle. Such a move would represent an extremely bullish second half of 2023 for risk assets like stocks and crypto.

Tech stocks according to the Nasdaq 100 (NDX) have taken a pause in price action, but the Average Directional Index shows that a trend is strengthening above a reading of 20 (now above 30). The ADX crossing the positive Directional Movement Indicator tends to cause some consolidation, but ultimately the trend keeps rising. It is around this time that Bitcoin begins to join in on the fun, and catches up and eventually outperforms. This time could be just around the corner.

Learn more about the Average Directional Index here.

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That’s it for free content. Behind-the-paywall content includes:

• An explosive altcoin update featuring Litecoin, Ethereum, & XRP

• A lesson on setting up volatility trade filters to avoid boredom and chop

Please subscribe for premium and support CoinChartist.io, or share CoinChartist (VIP) with friends and family. You can also follow CoinChartist on YouTube and Twitter. Don’t forget to also like and comment to let us know how we’re doing.