Market Overview + Technical Analysis
Content:
Market Overview-
The Current State of the Market ($BTC)
What to Expect Next? ($BTC)
Technical Analysis Review-
$RARI Technical Analysis
$REQ Technical Analysis
TOTAL + Dominance Review
Closing Thoughts
Market Overview-
The Current State of the Market ($BTC)
At the time of writing this Bitcoin is trending at $23,155 as it bounces off its previous all-time highs from 2018. This is a break in market structure as Bitcoin has never hit its previous all-time high since its inception. For some, they assume this to be a weakness of the trend and others say there is nothing to worry about. Most assume that recent events caused this panic selling to take place. Events like Tesla selling 75% of their Bitcoin, Celsius revealing a $1.2 billion hole in their balance sheet, and 3AC’s recent bankruptcy filing. These events have led to severe market pressure but may mark the local bottom. Those who are staying tuned on my YouTube channel are aware that I was calling the ~20k region to act as a local low, that would become a macro low if we display strength to the upside. This doesn’t mean we can’t go lower, but markets move in waves so one must consider levels of support.
Figure A
2. What to Expect Next ($BTC)
Currently, Bitcoin is trending to the upside from a local low. But what’s next for the king of crypto space? As an Elliot Wave trader, I observe the market in waves. So, I will wait for momentum to build before assuming the macro low is in. In my personal view* I believe we will continue chopping or drag slowly to the upside to about ~27k. But there is the possibility that we break down to below 20k. What then? Again, in my 5-years of being in the market, I can’t stress how important it is to stay patient for confirmation. Trading with confirmation is the core of my strategy, let me give you a real-life example. When you are stopped at a traffic light, one waits for the light to turn green before going. This is equivalent to staying patient for confirmation as it will often reward you rather than trading off emotions.
Levels I Am Using for Confirmation*
Bearish case - A break of 20k will most likely send us to 16k or lower. A reclaim above 30k will confirm the macro low is in. These are levels that I am watching that will sway my bias to either side. Currently, my bias is neutral bullish for the short term until more data is presented.
Figure B
Technical Analysis Review-
$RARI Technical Analysis
At the time of writing this $RARI trades at ~$3 on Coinbase. The chart used below is from Poloniex as it displays the full price action of $RARI for this technical review. To preface this I want to disclose that I shared my thoughts on $RARI on April 24th this year. In the technical analysis section, I covered that the price should hold the 6$ region otherwise it will fall to 2 dollars. Today, we are floating at that 2-dollar section and we have already had two bounces both leading to 100%(2x) moves to the upside. This is a great example of what I shared earlier about waiting for confirmation. Instead of being uncertain at $6, I was patient and bought at $2 and I took advantage of a 100% move to $4. What do we expect for future price action? I believe that as long as momentum keeps building we can reach $6-15 accordingly. What is momentum? Market structure making higher highs, higher lows with strong buying volume and an RSI above 50. These are examples of what I look for in a strong trend to the upside.
Figure C
2. $REQ Technical Analysis
At the time of writing this $REQ trades at ~$.118 on Coinbase. The chart used below is from Binance as it displays the full price action of $REQ for this technical review. To preface this I want to disclose that I shared my thoughts on $REQ on June 13th this year. In the technical analysis section, I covered that the price should hold the .046-.078$ region. Since then we have seen a bounce from .06 to .16 leading to a 100%(2x) move to the upside. What do we expect for future price action? I believe that as long as momentum keeps building we can reach $.18 accordingly. What is momentum? Market structure making higher highs, higher lows with strong buying volume and an RSI above 50. These are examples of what I look for in a strong trend to the upside and it looks like we are seeing that. It looks like it formed an inverse head and shoulder at the moment which is bullish, but a break of the ~.10 region may result in a lower price.
Figure D
3. TOTAL + Dominance Review
TOTAL REVIEW
After sharing my thoughts on $BTC and a few $ALTS, I think it's important to also discuss the rest of the market and where I think we are headed.* As I have covered on my YouTube channel I was expecting movement to the upside from the 800 billion region (blue shaded) as most expected the opposite. The region was a 2W demand zone that had a bounce to the upside. It’s my personal view that we are likely to keep heading up to the 1.5 trillion region. Currently, there is strong momentum being built up that makes me believe we will keep up-trending for a little bit longer before confirming if that was the macro low or a local low.
DOMINANCE REVIEW
In the below chart you will see a dominance chart that displays the sum of ETH.D+BTC.D. This sum does a great job displaying when ALT season takes place. If you look closely, we can see that in 2021 there was a clear loss of dominance as ALTS outperform $BTC and $ETH dramatically. Additionally, we see that we are currently seeing the chart at resistance(red shaded box) accordingly. If the dominance is not reclaimed, then most likely one of two things play out. 1) Alts bounce harder than BTC & ETH like a dead-cat bounce before dominance reclaims highs. 2) We witness an explosive ALT season that most people completely don’t expect. In either scenario, one may assume it's better to be in strong ALTS versus ETH and BTC for a short time.
Closing Thoughts
I think the overall market is experiencing a bounce as expected. But the big question that everyone has on their mind is, “Is this a relief rally?” That question is yet to be answered in confidence as more data is presented. However, I believe it is clear that a mini ALT season is inbound due to the TOTAL and DOMINANCE charts. While I am mainly positioned in ALTS, I am also positioned for both sides to play out if I am right or wrong. I think that what’s mostly overlooked when investing is risk management when I talk to friends, family, and other traders. It is important to understand your strategy before investing because “markets can remain irrational longer than you can remain solvent.” This is the harsh reality but I would rather be transparent than give one false hopium. With that, I thank you for reading and reminding you that none of this is financial advice!
