BTCUSD: Short Squeeze As USD Peaks. Is This The Beginning?

BTCUSD update: After the 6170 long trigger, price tested the 6431 to 6614 minor resistance zone quickly. This also happens to be where the bearish trend line is located. This type of price action is not a surprise since we have been writing about the high probability location for at least two weeks now.

The 6K psychological support, reversal zone boundaries at 5956 and 5669 along with the 8171 to 4938 broad support have been the focus. At S.C. we have been building inventory and continue to look for long trades in these markets.

What appears to be the key driver behind this surge in momentum is the U.S. Dollar. If you take a look at a larger time frame Dollar Index chart, you will notice the same type of price action, but inverted. Instead of a failed low, you will observe a failed high.

Interestingly enough, this reversal can been seen across forex pairs that counter the Dollar like EUR and GBP.

Do not forget, the major coins trade against fiat, and the world reserve currency is still the USD. That means it carries the most weight. Any broad moves in the Dollar can have dramatic effects on these coins.

If there is now a higher correlation to the USD, I want to be aware of it. For this reason I will be publishing a technical report on the USD on S.C. tomorrow so make sure to look for it.

In summary, at S.C., we are waiting for the next swing trade entry long. Since bearish structures are still in play, a retrace is likely, but the probability of a subsequent higher low has increased. Any pull back into the 6K area, followed by a long trigger will prompt us to participate in another long trade idea.

Stops and targets will continue to be conservative until broader bearish structures are taken out such as the 7381 resistance (.382 of current bearish structure).

The probability of the broader location outweighs the smaller time frame noise. And it has been reiterating long over and over. Do not lose sight, especially if this market decides to retest the lows once more. The next pull back will either make or break the broader reversal that appears to be in progress.