Bitcoin (BTC) delivered a long-awaited breakout on September 7 as BTC price action dashed bulls’ hopes for a recovery.
BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView
$23,000 Bounce ‘Still Likely’ According to Trader
Data from Cointelegraph Markets Pro and TradingView posted early losses for BTC/USD later on September 6, with overnight lows of $18,540 on Bitstamp.
The pair set its lowest since June 30, taking liquidity from its July low and only marginally recovering on the day.
BTC/USD 1-day candle chart (Bitstamp). Source: TradingView
The bearish price action followed nearly a week of sideways moves and the volatility could not be seen anywhere as market participants insisted on hoping for a break out of the upside.
In this case, they were disappointed, but for the famous Crypto trader Il Capo, there is still reason to believe that a bounce will occur.
“First of all, the price is now standing above the key daily support (low range, 18500-19000),” he argued in a Twitter thread.
“It is where the recent rally in the bear market started, which indicates there is strong demand here. A rebound from here into the supply zone (22500-23000) would be an ideal H&S.”
Crypto’s Il Capo added that each crash was accompanied by diminishing volume, suggesting that sellers had to work increasingly against the tide to bring prices down.
“The funding also indicates that the shorts go down each leg and that there is plenty of fuel for a short squeeze,” he added.
For this to not happen, consolidation must start below the late June levels near $18,500.
The thread concluded, “Summary: A short squeeze to 22500 – 23000 is still likely”.
“Most people are arrogant and arrogant, but the charts show otherwise. Don’t trust your short trades. I’m still mostly USDT but hedge for this potential move. Time will tell.
Data from the Binance BTC/USD order book uploaded by the monitoring resource’s on-chain material indicators confirmed that Bitcoin is operating in a highly liquid area.
Binance order book chart. Source: Material Indicators / Twitter
DXY gets 120 goals after a ‘big correction’
Meanwhile, the macro markets provided an interesting watch on the day as the US dollar rose.
The US Dollar Index (DXY) hit twenty-year highs at 110.78, accompanied by a deeper dive on the euro and yen, and continuing a dismal trend from recent months.
Related: Bitcoin Price Drops Below $19,000 As Data Shows Professional Traders Avoid Long Leverage Contracts
US Dollar Index (DXY) 1-day candlestick chart. Source: TradingView
For macroeconomist Henrik Zeberg, there was no short celebration of a rebound, as the dollar would then come back with a vengeance to head towards 120, the level it last reached in January 2002.
However, he predicted that the correction would mean the cryptocurrency “flying.”
By contrast, WTI hit its lowest levels since the beginning of the year in what popular trading account Blockchain Backers called the start of “oil capitulation.”
US stocks opened slightly higher, with the S&P 500 and Nasdaq Composite up 0.3% and 0.65% in the first hour trading session, respectively.