Sun. Aug 7th, 2022

Equity markets bleed

NASDAQ

Listen, the stock market has been in a stupidly long parabolic rise for quite some time. I mean, just look at the slope of the NASDAQ on the chart above. The NASDAQ’s chart is the definition of what a parabolic looks like. The fact that we’ve seen the NASDAQ take a big nose dive shouldn’t be a surprise – any news that could be considered negative on a global level was going to see equity markets experience a big pullback (which still has not occurred). The news that has caused the biggest drop in months in equity markets is related to the coronavirus outbreak in China. FOX Business reported extensively throughout the trading day about the raising concerns of the coronavirus and its impact. What I found most interesting is that most of the news in the US has been focused on the ludicrous Trump impeachment debacle – but that news is playing second fiddle to the coronavirus. Even CNN, a staunch opponent of Trump, has made the coronavirus its top news story.

 

Bitcoin is a flight to safety

Three White Soldiers Pattern

For the second consecutive day, Bitcoin closed higher. Currently, Bitcoin’s candle for the 28th is also bullish. If Bitcoin were to close around the 9100 area for Tuesday’s candlestick, then it would complete a candlestick pattern known a the Three White Soldiers pattern. If you are familiar with the pattern in the stock market, then you are probably familiar with the pattern opening with a gap up and inside the body of the prior candle. For cryptocurrency markets, we have to interpret the pattern differently. The reason for interpreting the pattern differently is due to cryptocurrency markets never closing as long as there are three long-bodied candlesticks in a row, that fulfills the pattern requirements. What the pattern represents is an overwhelming signal of a bullish continuation move.

Through the trading day in traditional markets, stocks crashed as investors fled risk-on markets. CNBC just reported that major auto manufacturers are evacuating employees out of China, oil prices are collapsing, and airline stocks have plummeted. Investors have pushed heavily into precious metals, especially gold and platinum. The Japanese Yen and US Dollar indexes have also risen. Currency markets show some very volatile trading conditions ahead. Amongst all of the uncertainty, though, Bitcoin continues to rally and is showing evidence of a trend continuation. The hidden bullish divergence that I discussed in my past article is continuing to play out.

Fibonacci Extension

The next key level for Bitcoin to break is the 9300 value area. After that, 10k is not far away. The amount of trading that has gone on between the 8800 and 9300 would suggest that any move out of this current value area higher would generate a substantial move. I believe Bitcoin can blast through the 10k value area without a lot of resistance. Bitcoin is creating extremely positive conditions to confirm the existence of a third impulse wave. Utilizing a Fibonacci extension tool, we can project the 100% logarithmic extension for Bitcoin all the way 24480. I believe that the perma-bears who have resting sell orders at the 10k region are going to be in a for a rude awakening. On a logarithmic chart, the 10k value area is irrelevant. It is the 15k value area that is the next major resistance. Expect a short squeeze at the 10k zone.