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Blocksmith Says: Bitcoin at Peak With No Pullback

Two excerpts from our weekly Macro Outlook, US Dollar, Dollar Yen cross and Bitcoin

Table of Contents

Bitcoin - parabolic run up is near the 80 day cycle peak zone, but not expecting a major pullback as the underlying trend is still up.

The driving force behind the current extremely bullish 40 day cycle, which bottomed at the end of December is the huge 54 month cycle start up from 21 November (see this post from 3 January 2023).

There are two 40 day cycles in an 80 day cycle and the next trough is due in the first week of February.  This implies that price should be in an 80 day peak zone around now or very shortly.  Because the underlying trend is up we are not expecting a dramatic pullback.

The short cycle FLDs are stacking neatly in parallel to the rally and typically this cascade pattern serves to suck price downwards.  Because the move up has been more or less parabolic, its harder to get a precise angle on the top out zone, but it is due and not much higher.  A reset lower should provide a new entry point to engage with the longer term advance.

Dollar Index - staying with the call: still stalking a 20 week cycle trough, but likely some more downside remains (100/101 range).

The US Dollar is still pressing down hard into a 20 week cycle trough zone, which implies an upside reversal is due, but first we likely need to visit as low as 100/101 range.  Try as we might it is very hard to come up with an alternate view, so the call we have been tracking for the last month or so has to stand in terms of timing.  This doesn't mean there isn't an valid alternate view, it's just that we cannot see one at the moment.

If you look at the circles and whiskers of the 20 week trough zone triangle at the bottom of the chart (the nest of lows from the 20 week cycle all the way down to the 20 day cycle), then the outermost whisker range is this Wednesday - 18 January.

Notice also that the yellow uptrend-line just visible at the bottom of the chart. This is the 18 month cycle valid trend line, but it is also a long range trend support zone.  There is in fact also a big confluence of support from multiple other technical methods which we have not shown here.

Dollar Yen - price failed to break out of 20 week trough zone, but price is now approaching an inflection level.

Last week's call for USDJPY to rally out of a 20 week cycle trough was early and the downside march continued instead.  However, with that said, price is still squarely in the 80 day nest of lows, which are neatly clustered and therefore have higher conviction.  Because we are due the 20 week cycle trough around now and because the 80 day trough must occur at the same time, if the 80 day cycle bottoms then the higher magnitude cycle trough can be called as well.  

Notice also that price is very close to the upsloping 40 week cycle valid trendline as well as the May 2022 low.  This enhances the call for a bottoming out sequence and recovery and fits with the views on the Dollar, Gold and Copper.