#132: The upward leg continues...
But are we on the stanky leg?
If the market rally we are currently on turns out to be a dead cat bounce before the bearish market shift, I suggest a rebranding for this chart formation.
I’m moving this back up to the top for the moment. There’s stuff popping up around crypto Twitter about the 4-year cycle being dead. I’ve been yammering on about the notion that most people are wrong about the Bitcoin cycles, and this “being dead” take is also just as wrong. Something that was never alive can not die.
ANALYSIS TL;DR
The market has a bearish daily structure, but price action has confirmed a technical bottom. Market participants are increasing their exposure across the board, but primarily into BTC. I am exposed with a levered and spot entry from $78K. I don’t intend to hold with daily closes under $76K. I’m also entertaining ALT positions.
Bullish trades are a moderate risk from my perspective since we have a bearish price structure, but being closer to supports than resistances creates a better risk-to-reward ratio, and technicals are all in favor of bullish trades now.
Any bullish trade execution I entertain is with the expectation that the bull market will continue until the end of the quarter and maybe one month beyond, when I will start looking for signs to exit. If I had to put entering the market now in stoplight terms for longs:
BTC: Green Light
I’m already in a medium-term bullish position with BTC at around $78K. The invalidation point for spot is closing below prior highs at $72K, and for leveraged positions, daily closes below $76K. I’ll be reevaluating exit targets upon a trigger of the daily bullish divergence trade setups. I’m not anticipating a new ATH at the moment, but I will happily take that.
ETH & ALTs: Green Light
I’m still not looking for dip-buying opportunities on ETH and ALTs despite “low” prices, with BTC dominance still indicating the potential for a harsher downside on ALTs in the event of a pullback. However, I’m actively hunting breakout trades with a price structure where I can rationally place a tight stop. This would be ideally a spot position, but entering a small-levered long isn’t out of the question. I have a couple of open positions now, and I have plenty of room for more.
Where are we now?
The bull market is still going, and the local bottom has been technically confirmed, though I’m not certain it’s anything more than a bear market rally, but that’s impossible to ascertain. The market’s appetite for exposure is building for all assets while prices are “low.” The retail sentiment is bearish but stabilized above extreme fear. We are in the timing window, which is the critical moment for a pivot, and daily chart technicals support the notion of a turnaround in the face of falling prices.
What is the plan?
SHORT-TERM BTC
Blending the precision of mathematical models with the artful subjectivity of technical analysis, statistical projections suggest BTC’s Sunday closing price will likely range between $85.3K and $93.1K.
The closing price for the week landed just outside the Max Expected Closing Range on Sunday (less than 1.4%), bringing the total to eleven out of twenty-one (52.4% accuracy). I described how these ranges are created in the ANALYZE section.
Focusing on the technicals, the RSI is finally back above the midline, suggesting continued bullish influence. It also is above the top adaptive band which would account for the bullish, impulsive price action we are seeing. Also, during last week we got a bullish divergence trade signal confirmation with the initial target at aound $96K.
My existing BTC spot position, established at $78,000, and my leveraged long position initiated slightly higher, remain open. I hold these positions, targeting profit levels derived from the divergence trade signal however I will be evaluating technicals in the $90K - $92K range to determine if I need to skim a little bit of profits early. I remain less confident that we'll see a new all-time high (ATH) before the end of the quarter or that we may see one next month.
SHORT-TERM ETH & ALTs
Stats suggest ETH’s Sunday close will range between $1800 and $2140.
On Sunday, the closing price for the week inside the Max Expected Closing Range, bringing the total to nine out of twenty (45% accuracy). Research continues to establish reliable assumptions for technical metrics related to ETH.
Focusing on the technicals, the RSI is finally back above the midline, suggesting continued bullish influence. It also is above the top adaptive band which would account for the bullish, impulsive price action we are seeing. Also, during last week we got a bullish divergence trade signal confirmation with the initial target at aound $2450.
My custom ALT index is still under development. Based on modified versions of older indices, observations indicate that ALTs are in a stronger position than ETH. Both ETH & ALTs have signaled bullish divergence trades, though. With BTC still increasing in price I’d look to take breakout trades with tight stops on ALT charts that are up at resistances instead of support buys right now. I’d keep tight stops upon entry because there’s no indication of a rotation to ALTs yet and if BTC dominance stays higher a pullback would hurt everything else a bit more. Regardless, for me the reward is slightly greater than the risk in terms of exposure to ETH & ALTs.
(MY) LONG TERM CRYPTO
I say “(MY)” Long Term because I think it’s vital for you to recognize that the analysis is from my perspective regarding my time horizons and trading plans. I’ve been long this bull market since late 2022. For me…
As time progresses without setting new price highs, we continue to shape the market similarly to the last bull market.
In a perfect mirroring scenario, we would have already hit the lowest low and initiated a rally, only to establish a macro lower high over the next nine weeks before transitioning into a bear market. With bullish signals on the daily timeframe there’s no technical reason not to be long. It is important to note that if we are tracking on the same path as the last market I’m ok with being long, but I’m still no swinging for the fences.
Looking below, last time when we retraced from (what in hindsight was) the market cycle high there was a bullish divergence trade signal (circled in blue) around the same timing as our current trade signal. Last cycle it failed to hit the initial target before eventually turning over and continuing the decline towards our ultimate market cycle lows.
This is why I’m paying attention to the price action as we aproach the zone underneath the trade targets. It’s the floor we broke down from and is our current resistance. Last cycle bulls could not recover over that level and I don’t want to be left hoping for prices that are too high for what turns out to be a bear market rally in hindsight.
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@ThePrivacySmurf
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Below are the TradingView chart links for the images above, which I use daily for my BTC, ETH, and ALT trading.
