Volatility is closing in, but traders may have to wait until the end of the year if history repeats itself, an analyst warns.

dial down

awaiting clues at the open on Wall Street on October 24, as expectations for a breakout were high.

BTC/USD 1 hour candle (bit stamp). Source: TradingView
Hang Seng falls the most since 2008
Data from Cointelegraph Markets Pro and TradingView tracked a secular trading day for BTC/USD after the pair hit weekly highs of $19,700 overnight.

Despite what Michael van de Poppe, CEO and founder of trading company Eight, called “worse than expected” manufacturing data from the United States, Bitcoin suffered on the day of a runway drop.

This has led to on-chain analysis resource material indicators suspecting resistance remains.

“On Sunday, BTC failed in all attempts to retake the 2017 top,” he said, summarizing the past 24 hours of price action based on his proprietary trading indicators.

“The change in the direction of the slope line A1 of Trend Precognition after the closing D and W indicates a loss of momentum. The price is currently waiting between the 50-day moving average and the trend line on TradFi.
Meanwhile, Van de Poppe pegged sell levels at $19,600 and $20,700, adding that the US dollar and US bond yields are “showing slight weakness”.

“The bullish momentum is fading in bond yields,” the popular Game of Trades trading account continued.

“When the latter happened, the markets soared.”
However, there were macro markets that offered clearer signs of volatility during the day, particularly in Asia, where Hong Kong’s Hang Seng saw its biggest daily drop since the Lehman Brothers implosion in 2008.

Hang Seng Index 1-day candlestick. Source: TradingView
Game of Trades also sees the S&P 500 as a potential source of a “massive move” with increasing volatility.

S&P 500 volatility annotated chart. Source: Trading Game/Twitter
“Big Expansion Move” May Be Months Away for BTC
For Bitcoin, volatility can be a long time coming, as a classic indicator provides signals that have only been seen a few times before.

Related: Less Volatile ‘Uptober’: 5 Things to Know About Bitcoin This Week

As Filbfilb, co-founder of trading suite DecenTrader, pointed out, Bitcoin Bollinger Bands continue to hit weekly time frame contracts, rarely reaching levels.

“The result of each example is obviously a big expansion move,” he told Twitter followers that day.

“The fun part is that in each of the examples, BTC spent 6-8 weeks getting further away from the level of breadth that we’re at now, before a big move out, so I’m afraid there’s a good chance of Keep this going up.”

BTC/USD comparative annotated charts. Source: Filbfilb/Twitter
Whether up or down, the current rise in bitcoin’s correlation with gold is something to watch out for, added Charles Edwards, founder of asset manager Capriole.

“Bitcoin bottoms often align with a high correlation to gold. We have that today,” he said alongside a chart comparison of prior periods.

“It’s much better if Bitcoin is correlated to gold. Sorry.”

Annotated BTC/USD vs. Gold correlation chart. Source: Charles Edwards/Twitter
The views and opinions expressed in this document are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.

Source: CoinTelegraph