Bitcoin hasn’t done this since January 2016
The US stock market suffered the worst daily loss of 2019. Investors have fled risk on markets and have flown to the Japanese Yen, Silver, Gold… and Bitcoin.
Equity Markets Hammered
The news has weighed heavily on investors and speculators involved in traditional financial markets – specifically the stock market. As a Gann trader, this drop was not a surprise – there was a square of price and time on August 5th. Gann said that when time and price are squared, big moves do happen. We have certainly seen that play out during Monday’s trade (August 5th, 2019). The chart above shows the Nasdaq, which closed -4.39% down for the day. And at the time of writing this (7:44 PM CST), it is down a further -1.4%. But all three of the major indices dropped on the day. The S&P 500 dropped -3.73% and the Dow dropped over -4.96%, which is one of biggest down moves the Dow has seen over the past couple years. Essentially, we’ve seen prices in the equity markets drop back down near the beginning of June’s open. But just as with the NASDAQ, the S&P and the DOW have continued to drop since the Monday close. The S&P down more than -1.14% and the DOW down -1.32%.
Gold and Silver Rise
Gold and Silver saw significant gains with equity markets and the US Dollar dropping. Gold made new 6-year highs to close up +1.59% (+$22.92) to 1463.88. Silver, the laggard, experience some significant swings throughout the day with a trading range between a high of 16.57 and a low of 16.12. It ultimately closed +1.21% higher (+0.1957) to close at 16.39. Silver is forming a nice bull flag and it it looks poised to have a strong continuation of this bull move to press on towards the key $20 value area. That would be a 3 year high for silver.
Bitcoin finds buyers amid market chaos
It almost seems hard to believe, but Bitcoin has completed a strong consecutive 7-day rally, moving from 9371.96 on July 30th to a Monday high of 11950. The highlighted green channel above shows the formation of a strong continuation pattern known as a bull flag. Bull flags are a common pattern that indicated continued movement to the upside. Bull flags can be a trick pattern though because they can extend for a period of time that creates uncertainty among speculators and investors. From the current value area, Bitcoin needs to have a strong push above this current flag pattern and ultimate close above the high of the prior swing high in the flag channel at 12575. That is a very strong possibility if Bitcoin can develop the bullish buying conditions that would form an ideal Ichimoku breakout condition. An ideal Ichimoku break out condition occurs when both price and the Chikou Span are above the cloud, along with the Chikou Span above the candlesticks an in open space (meaning it won’t move into any candlesticks over the next 10 periods). In order for those conditions to be met on the daily Chikou Span, it would need to remain above the 12700 value area – which it could easily do if it can open above that zone on the next trading day. There is one monstrously bullish condition here that needs to be addressed, and that is on the image below:
The image above is the weekly Ichimoku Bitcoin chart. Both price and the Lagging Span are currently above the cloud. Do you know the last time this happened? The week of January 4th, 2016. Bitcoin was trading around $450 at that time. The resulting move from that weekly break above the cloud is self evident. And I believe it is entirely probable that we experience a similarly strong and positive move if Bitcoin does have a weekly close above the cloud with both price and the Chikou Span.