We are getting closer to a buying opportunity on Bitcoin.

The last time we looked at the King of Cryptocurrencies was exactly one month ago. Back then, Bitcoin was trading for $8,167.

I didn’t like the setup. It looked to me like Bitcoin had more work to do on the downside. And, I advised traders to wait for lower prices before buying the cryptocurrency…

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Of course, just to prove me wrong, the price of Bitcoin rallied immediately. It shot up as high as $9,500 per coin just two weeks later. Since then, though, the sellers have been in control. Bitcoin closed yesterday at $7,802. And the price has now reached a critical point.

Take a look at this chart…

Bitcoin is hovering just above the mid-October low of about $7,400 per coin. That’s an important support level. Bitcoin bulls need the cryptocurrency to stay above that level, and form a higher low right here, in order to create the conditions
for an intermediate-term rally.

If the price of Bitcoin dips below $7,400, then the next support is $7,000. Below that level there’s a big gap lower to the next support level around $5,500.

On the other hand, if Bitcoin can find support around the current level and turn higher from here, then it will form a “higher low” on the chart. That’s the first step towards establishing a bottom on the chart, and starting a new leg higher.

But, Bitcoin doesn’t have a lot of room for error here. It needs to turn higher soon, or else suffer the potential for a sharp move lower.

Aggressive traders can buy Bitcoin right here and keep a tight stop at about $7,500 per coin. Conservative traders might wait for Bitcoin to climb back above its 9-day exponential moving average (the squiggly red line on the chart) – which would confirm that a higher low is in place – before jumping into the trade.

Best regards and good trading,

Jeff Clark

Reader Mailbag

Today in the mailbag, a subscriber lends their take on the high-yield bond sector

You’ve rightly pointed out that HYG has formed a pattern of lower highs and lower lows since its late October peak. I wish to point out, that while more subtle, IWM (Russell 2000 ETF) peaked on November 5 and seems to be forming a pattern of lower highs and lower lows as well.

Its MACD chart also shows bullish momentum faded to closing yesterday just a wee-bit bearish. If we see a lower low than the middle of last week’s close, it’s confirmed.

– Tim

And subscribers continue to respond to Jeff’s letter from last week

Interesting essay. I mostly disagree with Darcy’s comment. It’s not the 1% that is the problem with this country. For the most part, the wealth is very generous and philanthropic; contributing to everything from the Salvation Army to some state universities.

The problem is with the greedy, money-grubbing politicians that sell their souls for power and influence on the highest bidder or political action committee (PAC). Many of them care more about themselves and their power than the citizens they represent. I do think instead of being signed the 1% it could be the 80%.

Although Darcy is correct, only the 1% would be in a position to actually leave. About 50% of our country doesn’t pay income taxes at all. I feel most of them would love to work and advance to the point where they would qualify to pay taxes. Somewhere around the other 20% are perfectly content to live off the government assistance… paid for with the taxes of hard-working Americans. Just my thoughts. Thanks for the thought-provoking essay.

– Mahlen

I greatly enjoyed Jeff’s essay last Friday. I love writing that requires and engenders deeper thinking. I was also touched by the letter from Clarissa. I also enjoy Shapiro and Klavan a lot and would highly recommend the Dan Bongino podcast to them… He’s received information many months before the mainstream media gets it. Many thanks Jeff for your multifaceted efforts.

– Gary

Jeff, your Friday essay was quite spot on, but probably should have been signed “All taxpaying Americans”. By the way, Darcy would be helped to learn that no society has ever been great by taxing its people more. Great societies come from less government involvement and taxation.

– Truitt

I could not agree with you more. I am firmly in the mid to lower 99%. I know that the 1% will likely get screwed over by those who somehow believe they are not paying their fair share. It is this short-sightedness and jealousy or deep-rooted resentment of some people who will never admit they have a job because the 1% have provided them with one. Once the 1% are alienated the jobs will depart along with them as anyone with a decently functional brain will know.

– Brian

I loved the essay as it was right on target. I am tired of people who cannot see other’s successes and the fact that almost 100% of the so-called one-percenters had to work hard and save to get where they are today.

One cannot expect to achieve much by sitting home, waiting for the government to confiscate from others, and give it to them in order to get ahead; they need to get up and get to work and be a better saver to get ahead a little at a time.

Just before the negative, brainwashed people attack me, I need to say that I was not born with a silver spoon in my mouth… I came to this country in 1987 with my wife and daughter with $100 to my name.

Neither I nor my family ever received a dime in welfare. I put myself through school (yes, I am still paying my student loans…) and now after 30 years of hard work and paying more than my fair share of taxes, I am being attacked by these lefties as a one-percenter. Losers always look for excuses to justify their failures.

– Bahman

I fully agreed with the inherent message in last Friday’s essay. However, I thought it should be signed, “The American Taxpayer” because all taxpayers are cheated when the government continually, and repeatedly, wastes our money and beats us over the head with their inane rules and regulations.

Imagine the “Land of the Free” not even ranking in the top 10 freest nations on Earth? I can’t even speculate with certain cryptocurrencies legally today because of the IRS and the SEC’s draconian rules – with MY OWN MONEY!

That said, Darcy’s vitriolic response is completely uncalled for, and resembles an alarming attitude held by more and more people today, spurred on by the media. The attitude of “us vs. them” totally ignores the fact that anyone willing to work hard and smart can join the 1% and earn the same freedoms that Darcy complains about.

And the blame he/she places on the 1%? It is the media and the uninformed masses (99%?) that continue to elect uninformed, unscrupulous politicians that destroy our freedoms more and more every year.

– Kelly

That was a brilliant letter, describing the current state of affairs. That is what Ayn Rand expressed in her Atlas Shrugged. If I voted for Donald Trump, I have to be afraid to say so in public. Can your readers in 99% answer my question? Income wise I am a 1%er, but wealth wise I am a 99%er because of the high-income tax I pay year over year.

– Indira

I’m usually never one to respond to these types of newsletters, but my blood started to boil after seeing Darcy’s comments regarding the 1% and I needed to say my piece.The 1% didn’t ruin the country and steal from the 99%. The self-serving career politicians, power-hungry deep state, and greedy Wall Street manipulators are the guilty party that the anger needs to be directed towards. Those groups definitely are within the 1% but they are NOT the majority of them.

In my opinion, most of the real 1% are hardworking business owners, entrepreneurs, and creative people with brilliant ideas that were lucky enough to beat the odds to become successful. No one seems to care that professional athletes and movie actors are making millions of dollars to play a game or play pretend in front of a camera. They work hard and have gifts that allow them to make money. So does everyone else.

But somehow, the small business owner who risks everything in order to succeed is demonized and placed in the same bucket as the greedy and power-hungry manipulators.

I’m sick and tired of the victim mentality. If you don’t like your circumstances in life…make a change. You might fail and lose everything, or you might succeed and be able to join the hated 1%.

– Michael

Yes, the 1% have made out great the last decade or so, but that is totally due to the Fed’s zero-interest-rate policy. And why did the Fed lower it so much? Look no further than the unending spending by Congress.

The 1% did not steal Supplemental Security Income, again it was the Congress who tapped the cookie jar so full of money they couldn’t resist. It was Congress that put an IOU in that cookie jar written on a piece of toilet paper and now that toilet paper is worth more than the promise written.

The Fed has taken us so far down the debt/credit cycle there is mathematically no way out. And when the end comes even some of the 1% will be hurt, but they have the ability to leave if we squeeze them as much as the left is promoting. Real money will be your only salvation.

– Peter

Thank you for posting Darcy’s reply. It makes me so sad to see someone who is apparently a subscriber remain so uninformed. The whole world is balanced between growth and entropy. The prudent and productive add value, whether it amounts to 1% of us or 10% does not matter. When we add value, we get a paycheck; when we do not, we still want one.

But entropy is constantly eroding value, whether it’s by rust or theft. Darcy’s idea of work is the effort it takes to steal from others. The truly wonderful thing about freedom is how the entire economy prospers… not just the most productive individuals. I want to be on the productive side.

– John

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at [email protected].

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