A top analyst known for calling Bitcoin (BTC) bottoms is warning that the rallies witnessed by crypto markets at the start of the week may have been a bull trap.
Pseudonymous analyst Bluntz tells his 279,800 followers on social media platform
Traders use Fibonacci levels to identify potential support and resistance levels.
Says Bluntz,
“Gut tells me that these crypto pumps from early this week may have been a trap.
I took a good look at DXY and ES (S&P 500 E-mini futures) today and gave myself a bit of a reality check.
Weekly divs on both were confirmed and BTC has so far rejected the 0.618 Fib.
At the time of writing, Bitcoin is trading at $62,087, down fractionally on the day.
According to Bluntz, Bitcoin’s pullback comes as the U.S. Dollar Index (DYX), which tracks the value of the U.S. dollar against a basket of major fiat currencies, is showing signs of strength. He shares a chart indicating that the DXY has confirmed a bullish divergence on the weekly chart, indicating that the US dollar is poised for a rally.
Meanwhile, Bluntz says the S&P 500 is showing a bearish divergence – a potential reversal signal.
The DXY has historically been inversely correlated with the movements of risky assets. When the DXY is strong, it suggests that investors are trading assets such as Bitcoin and stocks in favor of the US dollar.
At the time of writing, the DYX is hovering at 102 points, while the S&P 500 is trading at 5,751 points.
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Generated image: Midjourney
