Fear & Greed Friday
Before I get to the current sentiment index measurements I want to toss in a recap from last week since I’m posting this week freely to everyone and it had some relevant context to the current market conditions:
The week's custom sentiment indicator, the Smurf Sentiment Index, is below. We are still residing in a state of extreme fear albeit in a cyclical uptrend into the first weeks of June. The RSI is setting up in an ideal condition for a potential increase in greed (decrease in fear) if the RSI breaks above the top band and the midline. The daily price cycles on BTC also show a similar bullish cycle but given the price action, I believe we are experiencing simply a pause in the downward trend. Increases in price action may occur but I’m not anticipating a mid-term trend flip to bullishness at the moment given the technicals.
For a few extra thoughts, BTC & ETH are both nearing the edge of possibilities of more major downside continuation. I’m not going to post all the charts explanations here in this tiny post but for a basic snapshot, looking specifically at traded volume at price levels on different timeframes, weekly closing prices below the thick white dotted lines don’t have much support until the lower levels. IMO the lower levels are where we could see wicks from a large-scale capitulation (which hasn’t happened yet btw). The lower side projections of the total crypto market cap during this event from my analysis would be around 700B.
This week’s Smurf Sentiment Index:
We are still in a state of extreme fear and cycles are projecting continuation in the lower zones til the end of the month. The RSI is testing a break above the midline for support and the RSI is also above the top band. This is an ideal setup for bullishness but the cyclical bearish pressure has me skeptical of a larger rally right now. I wish I had data back from 2017/2018 to compare against. I’m quite curious about how long the market existed in fear and what the major capitulation looked like but alas the datasets I’m drawing from didn’t exist until a little over a year ago. Being in these states of fear and downturn from the midline of the RSI I’m not expecting major relief from the stress in the markets. Even if there are rallies before July I expect they will sell off and return to lower levels. Too many people at the moment are expecting the next “shoe to drop.”
This weekend I'll polish up the video on market structure and release the commentary on youtube. Have a great weekend. See you Sunday and thanks for being here for my first year of writing! Here’s a 1 Year Anniversary Sale for the paid section, after today the free posts go back to being just on Sunday. I tried to do 36.5% but apparently, Substack only likes whole numbers. The sale ends in a little over a week, next Sunday.
@theprivacysmurf