Bullish Consolidation Options

I was saying on my last post that there were daily sell signals fixed on BTCUSD (Bitcoin) and SOLUSD (Solana), that a bullish consolidation period looked very possible and we’ve been seeing that. So how’s that going?

On the Bitcoin daily chart below the daily RSI 5 sell signal has almost reached the possible near miss target at 31 to 37 on the RSI 5 and that might be enough. The RSI 14 sell signal has fixed but is a longer term signal and we may well see significantly higher highs before that makes target. It is an early warning to watch out for a longer multi-week or month consolidation that may be coming in the first months of next year.

Since the signals fixed Bitcoin has retraced to backtest the daily middle band twice, and that is a support level that has held so far and may continue to hold as support. .

BTCUSD daily chart:

On my premarket video this morning I was looking at a possible small H&S on Bitcoin, that broke down shortly after I recorded the video, with a target in the 90.3k area. That was followed quickly by a sharp rally, but the usual principle applies here after an H&S breaks down, in that I’d expect either that Bitcoin reaches the 90.3k target, or rejects back up to the top of the H&S at 98.7k.

Is there a case for rejecting back up here? Yes there is, a bullish triangle may be forming, and this morning’s low may be at that triangle support. If so I’d be looking for the 98k area next, a pullback into the 95k to 96k area after that, and then a break up into a retest of the all time high.

BTCUSD 15min chart:

On Solana the daily RSI 5 sell signal has already reached target, and the daily middle band held as support on the first test and broke on the second.

In my premarket videos I’ve been looking at an obvious backtest zone in the 185 to 220 area, and that was reached after I recorded this morning’s video with a low at 215.15. On the daily charts the key levels I am watching at the monthly pivot at 219.10 and the 50dma at 200.52.

SOLUSD daily chart:

In the short term it seems very likely that a bull flag is forming on Solana. The flag resistance is established, and I have drawn in the three most likely options for the flag support trendline. The first of those was reached yesterday and this morning’s brief spike down could be a bullish underthrow signalling a low. That would be confirmed by a break over flag resistance, currently in the 236.5 area.

If Solana needs to go lower, the first high quality trendline options is currently at 212, and a good match to a backtest of the broken April 2024 high at 209.86. The second high quality trendline option is currently in the 196 area, currently a strong match with the 3sd daily lower band, and a backtest of the July 2024 high at 193.87.

SOLUSD 15min chart:

Bitcoin and Solana have not been strongly correlated during this consolidation, and the same is also true of ETHUSD (Ethereum).

There were no daily sell signals fixed or forming at the time the sell signals fixed on Bitcoin and Solana, and it continued higher, and has now broken over the declining resistance trendline from the 2024 high at 4092.73, making a retest of that high likely on the next upswing.

At the same time there is now a possible daily RSI 14 sell signal brewing and yesterday a daily RSI 5 sell signal fixed.

ETHUSD daily chart:

A small H&S has also formed and broken down on Ethereum with a target in the 3345 area. As with the Bitcoin H&S, I’d expect that to either make target, or to reject back to the H&S top at 3763.68.

ETHUSD 15min chart:

What’s the takeaway here? Well overall this is a likely short term bullish consolidation and I’d expect all of these three to go higher soon, though we may see some more downside first in the short term.

On the bigger picture, the daily RSI 14 sell signals are warning that a longer and deeper consolidation may be coming within a few months.

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I'm also to be found at Arion Partners, though as a student rather than as a teacher. I've been charting Crypto for some years now, but am learning to trade and invest in them directly, and Arion Partners are my guide around a space that might reasonably be compared to the Wild West in one of their rougher years.

Gathering Storms

In the last couple of weeks of October I was writing about the likelihood of seeing a bullish November, and we saw that, but it wasn’t really what I had in mind. The bullish part came when Trump won the presidential election and, on SPX at least, the rest of the month was spent retesting that high, with both SPX and ES both now at new all time highs from there.

I was looking for more, and we might still get more, but more than half of the bullish window into Xmas is now behind us, and the news coming from the coming new administration is already starting to disturb the markets.

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There’s likely to be a lot of that coming next year, which I’m thinking may be the most interesting year on the markets for a long time, but I’ll be writing a lot more about that before the end of the month. For now, let’s just say that I’m weighing possible bearish options for equities in December.

The target I was thinking might be reached on SPX in December, with a possibility of making a high there that might last through next year, is the larger resistance trendline shown on the chart below, and that is now in the 6200 area. That could still be seen if we see a decent bull run from here. There are other options though.

SPX weekly chart:

On the SPX daily chart the high on Friday has set a possible RSI 5 sell signal brewing. That’s just a potential for now and there’s nothing similar on QQQ, DIA or IWM yet.

SPX daily chart:

If SPX stalls in this area there is a very decent looking double top formed, and a sustained break below double top support at 5853 would look for a target in the 5650 area, though there is also a possible H&S neckline and strong support area in the 5700 area.

SPX 15min chart:

There’s also a very decent looking double top setup on QQQ, and a sustained break below double top support at 494.49 would look for a target in the 473 area.

QQQ 15min chart:

There is a decent looking double top on IWM as well. We’ll see.

IWM 15min chart:

The majority of the current bull window on equities is behind us now and I’m moderating my expectations of what we may see into Xmas accordingly. The closer we come to inauguration the more I’m also going to be looking at the incoming administration and the policies that are being talked about for the first 100 days of the new administration. Tariffs, Ukraine and others may make this one of the most interesting years on the markets that anyone can remember.

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