Traders say Bitcoin is overdue for a breakout, but are also keeping a lid on how optimistic they should be about a macro trend reversal.
Bitcoin (BTC) climbed to new October highs at the Oct. 3 Wall Street open as Credit Suisse concerns heightened.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Traders close in on rangebound BTC
The largest cryptocurrency reacted positively to lower than expected United States manufacturing data, while in Europe, market turmoil over Credit Suisse gathered pace despite executives’ reassurances.
“We are kicking off October trading in the same congested area we ended September,” on-chain analytics resource Material Indicators wrote in one of several updates on the day.
“The 21 DMA is behaving like a ceiling on BTC price, but expect it to be retested soon. Need it to do so for any shot at reclaiming the 20s.”
Material Indicators was referring to Bitcoin’s 21-day moving average (MA) at around $19,400, this now potentially coming in for a resistance/ support flip.
BTC/USD 1-day candle chart (Bitstamp) with 21MA. Source: TradingView
A further post revealed a proprietary trading indicator flashing “long” on daily timeframes, increasing hopes that bulls would be able to tackle the $20,000 mark.
Analyzing the behavior of derivatives traders, however, William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, warned that long positions were too eager to confirm a trend change.
“Important to monitor the BTC derivatives market. For the time being, longs have been piling in on every move up in price,” he explained.
“This is not what we want to see for a full on trend reversal (similar to the end of July 2021). We want to see participants conditioned to ‘fade’ rallies.”
Order book data from Binance, the largest exchange by volume, meanwhile showed BTC/USD acting in a tight range bordered by sellers at $19,500 and bid interest around $19,150.
Below that, support lay at $18,800 at the time of writing.
BTC/USD order book data chart (Binance). Source: Material Indicators/ Twitter
U.S. stocks make up losses as dollar cools
Turning to the macro situation, U.S. Purchasing Managers Index (PMI) data coming in below expectations pressured bond yields.
At the same time, oil and silver, in particular, gained, while on equity markets, the S&P 500 and Nasdaq Composite Index were 1.8% and 1.3%, respectively.
“Coming week more PMI data, unemployment and job openings will be coming in. The turn in markets? Seems like it,” Michaël van de Poppe, CEO and co-founder of trading firm Eight, responded as part of market commentary.
Van de Poppe additionally described Bitcoin’s current trading range as “ultra boring” while hoping that crypto would copy silver’s performance.
The U.S. dollar index (DXY), a classic headwind for crypto, slid below 112 points on the day.
U.S. dollar index (DXY) 1-day candle chart. Source: TradingView
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