Gold and Bitcoin: More Critical Clues

Bitcoin on the Brink

That’s bitcoin:

Barely hanging above $100k (currently below it; shorting it above $104k was most likely an excellent idea), but already below the previous highs and the lower of the rising support lines.

This is a severe technical damage, and I don’t think the bulls will be able to save the cryptocurrency market this time.

This week’s performance tells us why. What did the anti-USD asset – bitcoin – do in the last few days? It declined and even though it rebounded slightly it’s now back down to $100k.

This happened while the USD did what?

Bitcoin failed to rally when the USD Index declined. This is a subtle, yet very important, clue that bitcoin is going to move lower – probably as soon as the USD Index is back in the rally mode.

It looks like we could get a drop to 99 or so (the rising blue support line) and the next upswing would start from there. Or we could see some back and forth movement like we did in the second half of October – but the following breakout and rally are almost certainly coming.

If crypto is on the verge of collapse, will the general stock market that’s being pumped by the AI-based investments be able to hold up?

It might not. In fact, stocks have already invalidated the breakout above their previous highs, and things can get pretty ugly soon.

And it will be surprising only to those who don’t pay attention.

That’s more or less how the AI investments look like these days.

Seriously, though, the AI-related companies started investing in each other so much that it became ridiculous. And the same goes for the stock market valuation.

Classic Topping Patterns

On the precious metals market, the writing is on the wall as well.

 

Please note how consolidations in both gold and silver are horizontal – simple back-and-forth patterns. In gold’s case, that’s another multi-top, and in silver’s case it’s likely the right shoulder of a head-and-shoulders top.

And here’s what’s going on in the mining stocks:

The miners move lower during this back-and-forth movement (note: the downside target is the most likely area for the short-term rebound given the current data).

While the precious metals are moving horizontally, miners decline. The latter are underperforming.

Why? Because they are most likely leading the entire sector lower.

Yesterday’s intraday reversal in the GDXJ was also telling – a classic bearish sign. Bulls just couldn’t withstand the selling pressure.

In other words, my Tuesday’s extensive analysis remain up-to-date.

All five of our trading positions remain up-to-date and its seems that they are all about to move in their ‘favorable’ directions. Our FCX put options already moved below their strike price and have excellent potential, and the bitcoin short is becoming more profitable with each hour today.

Thank you.

Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®