Market sentiment for crypto is almost at an all time low as Bitcoin falls to $85,000. Is Bitcoin the canary in the coal mine for the entire financial system? Is the US stock market about to follow it with a big corrective movement, or is Bitcoin just putting in a bottom before heading back to the highs? U.S. stock market about to roll over? Source: TradingView Viewing the weekly time frame for the S&P 500, the biggest companies in the US, it does rather look as though the Index could be about to roll over. The ascending channel has remained intact for a few years, and having touched the top, the next logical move is to head back down to the bottom. The Stochastic RSI and the RSI indicators below are leaning towards this scenario as they cross back down or roll over. It doesn’t have to necessarily be that the price goes to the bottom of the channel. It could bounce from the horizontal support of the last swing high at around $6,100, a 10% correction that wouldn’t be the end of the world and could help to reset the U.S. stock market after having remained at such overbought levels. So where does that leave Bitcoin? BTC about to start reversing its downtrend against S&P 500 Source: TradingView The above weekly chart is the ratio of BTC to the S&P 500 (SPX). It can be seen that BTC has been falling against the SPX since mid-July of this year, and that so far the correction amounts to around 36%. The ratio is at a decent horizontal support level now, but if this fails, the 0.786 Fibonacci is just below, which is the deepest retracement level, and would signify a 40% correction overall. The Stochastic RSI and the RSI indicators at the bottom of the chart are both at bottoms and look ready to turn back up, signalling a recommencement of the upward trend for BTC against the US stock market. This could happen as early as the next week or two. $BTC price dicing with death Source: TradingView Another little tumble for the $BTC price brought it down around 3.4% on Monday. This really did bring market sentiment down to the depths once again, as the Fear and Greed Index indicator is now rooted firmly in the Extreme Greed segment at a score of 11. The $BTC price is now dicing with death underneath the major bull market trendline, and is potentially about to dip under the downtrend line which it had only managed to break above just a week ago. There is though a reasonably firm horizontal support level at $86,000, which the bulls will be hoping will add to the support of the two aforementioned trendlines. The Stochastic RSI indicators on this time frame are heading to the bottom, and may be there by Wednesday or Thursday, ready to cross back up again. All short-term time frame Stochastic RSI indicators have reset, so once the daily is also at the bottom the next rally can probably begin. Correction is coming to an end Source: TradingView The weekly chart view for $BTC shows that the price is flirting with the major bull market trendline again, but that there is strong support at this level. The price may be able to move clear of the falling wedge structure by next week as the bottoming process perhaps draws near to a conclusion. The all-important Stochastic RSI indicators are in the process of crossing down again. It just remains to be seen whether they will cross back up by next week, or whether they will actually bottom again. Either way, this correction is likely coming to an end. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
