Bitcoin has lost the bullish momentum it had garner the past few days. The bulls appear weak at the momentum and we have just seen the S&P 500 (SPX) break below a key trend line support. This is not good for the bullish case and for that reason we are now out of our long positions. We would be waiting for market conditions to change before we enter further positions. So far, we do not have a decisive move in either direction.
The sideways movement for now in BTC/USD indicates that the market might not do anything of consequence over the weekend. We could see the downtrend begin in case the S&P 500 (SPX) continues lower next week. The same is true of the EUR/USD forex pair which also appears to have topped out. That being said, both markets could still see near-term upside but the point is, it is not worth the risk/reward for us to remain in our long positions at this point.
For the past couple of days, both the stock market and the cryptocurrency market have seen some really good gains. This is now a point where we step out and wait for direction. Even if the stock market continues lower next week, we would wait before entering shorts. One of our confirmations would come from the Dollar Currency Index (DXY). We need to see it find support at the key S/R level it has now declined to. If it begins an uptrend next week and climbs above that trend line support again, it would be a solid confirmation for us to look for short entries.