Issue 101 – Is Bitcoin Following the September Pullback?

October 27, 2021


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Bitcoin is pulling back again today, so naturally, everyone is scrambling to figure out where it might bottom.

In today’s issue, I’ll share a fractal that might help answer that. It gives us an idea of where Bitcoin will find support, which happens to line up with other factors.

I’ll also provide updates on the DXY, ETH, DOGE, VET, and VRA.

Let’s get it!


September to October Comparison

A glance at the recent pullback from Bitcoin points to the idea that it’s following a similar path to September, only on a smaller scale.

And we’ve seen this before. For example, you may recall how the price action in August and early September resembled the February to April action. I discussed this at length in these newsletters.

Here’s how the October pullback looks if I plot September over top of it:

BTCUSDT (daily time frame)

Keep in mind that I’ve condensed the September pullback to fit the current price action.

Regardless, there’s a strong case to be made that the October pullback is following September’s correction.

Even the 4-hour time frame suggests it:

BTCUSDT (4-hour time frame)

We’ll likely have an answer by the end of the week. If Bitcoin bottoms between $55,000 and $57,000, then this fractal is right on track.

In my opinion, a bottom in that range followed by a close above channel resistance would confirm that it’s playing out.

If we see BTCUSDT close below $55,000, then it’s probably on its way to test the September high at $53,000.

Also know that there’s a ton of confluence around $55,000. I explained this to Cryptocademy members on Monday.

Given the fractal above and the multiple confluence factors, $55,000 is one support level you don’t want to ignore.

US Dollar Index (DXY)

I thought I’d start today’s analysis with the USD index (DXY). There are a lot of Twitter accounts that believe the DXY has no bearing on crypto.

However, I assure you that there’s a distinct inverse correlation between the two.

And that makes sense given that we tend to price BTC, ETH, etc. in US dollars. I mean, it is still the world’s reserve currency, despite the memes.

Lately, the DXY has been hanging out above the 93.50 handle. That’s key support as long as the market is above it on a daily closing basis.

At the same time, the market has carved what could be a rising wedge since the June lows. But ultimately, the DXY needs to close below the 93.50 region to suggest weakness.

Remember, a weaker DXY is what we want for Bitcoin and gain to move higher. That’s why a break below 93.50 would be ideal for the bullish crypto narrative.

Key resistance is 94.50.

DXY (daily time frame)

Bitcoin (BTCUSDT)

Bitcoin is breaking below the $60,000 mark today, which could be significant if the market fails to recover before the close.

A daily close below $60,000 flips that area to resistance and opens up the key support area between $57,000 and $55,000. I’ve discussed the latter in the Cryptocademy member’s Discord group all week.

There’s a ton of confluence around $55,000. However, don’t forget that the September high near $53,000 could also play a role.

I have orders set around the $55,000 region in case we do see BTCUSDT pull back further. As always, that’s not financial advice. It’s only what I’m doing, so you should make your own decision.

Key resistance above $60,000 comes in at $63,600 and $67,000.

BTCUSDT (daily time frame)

Ethereum (ETHUSDT)

ETH is testing a critical support area today around the $3,900 level. It’s the intersection of the May trend line and the September highs.

A daily close below that area would present a big hurdle for buyers. Of course, that doesn’t mean it can’t happen, or that we won’t see an intraday move below $3,900.

If we get the latter, I’ll be keeping an eye on the $3,700 area. That said, I wouldn’t want to see ETH close the day (especially week) below $3,900.

As I’ve maintained for a while now, ETHUSDT needs to clear $4,370 on a daily closing basis to secure the breakout and enter price discovery.

ETHUSDT (daily time frame)

Dogecoin (DOGEUSDT)

DOGE is bouncing aggressively today from new support near $0.23. That’s the trend line from the all-time high.

However, today’s session would need to close inside of Tuesday’s range for it to be considered a bullish signal. Tuesday’s low was $0.2520, so that’s the level to close above.

If DOGE can do that, we could see this market move back to $0.27 resistance. And if it doesn’t, then it likely slides lower toward $0.23 support.

I still think DOGE has a lot of potential if the bull market continues. But with Bitcoin looking like it wants to test lower levels, now may not be the best time to enter.

DOGEUSDT (daily time frame)

VeChain (VETUSDT)

VET is pulling back aggressively today after an impressive rally to $0.1478.

We’re seeing that a large portion of the recent move was built on leverage, which is no surprise. That explains why VETUSDT dropped 21% in a matter of hours.

So where might VET go from here?

That depends on what BTC does. I know that may be obvious to some, but it’s true.

If we see Bitcoin bottom around $55,000, then I doubt we see VETUSDT move below Wednesday’s low of $0.117.

However, a deeper correction toward $53,000 BTC could put VET in the $0.10 to $0.11 range, especially as we’ve seen VETBTC reach resistance and sell off today.

Of course, if the bottom for Bitcoin is already in, then VET should hold its current level and move back to $0.155 resistance.

VETUSDT (daily time frame)

Verasity (VRAUSDT)

VRA has enjoyed an incredible run since breaking out from $0.05 earlier this month. I covered that breakout at length.

However, no rally is without pullbacks. They’re a necessary and healthy aspect to any move higher.

If VRAUSDT does pull back to the $0.055 – $0.065 support area, it could present a favorable buying opportunity.

Key resistance is $0.085.

VRAUSDT (daily time frame)

Justin Bennett

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About the Author

I'm Justin Bennett, a currency trader turned crypto enthusiast. My journey started with stocks in 2002. After limited success, I transitioned to currencies in 2007, which later became a full time trading gig. The journey continued, and in 2020, I committed to learning about cryptocurrencies. It was love at first sight. Cryptocademy.com is the culmination of my love for cryptocurrencies, my passion for financial markets, and desire to learn and teach.

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