In this ‘Market Open’ there are a lot of thing I’d like to cover, and it is coming out late precisely because of that. Last week there wasn’t one although I’ve shared several ideas on Tradingview which I’d recommend you read. The reason I didn’t share them here is that they were a bit more chaotic and I was actively commending, while now I’d like to present something more solid.
For those that have read my previous posts you’d know that I’ve been bearish/neutral and tried to have a more ‘step by step’ approach as the situation was a bit tricky. To me it was clear that the altcoin cycle had turned, but I wasn’t sure for BTC as I want to see its reaction on the 11.1-11.5k resistance zone. When it comes to alts there isn’t much to commend as it was extremely clear for several days, if not weeks that the first mini cycle (out of the 3) was over. In my opinion it will take alts quite some time to really recover although there will be some strong bounces on the way down.
By the way things look right now I’d expect Bitcoin to dip to the 7-8k area, wipe the longs, take premiums deeply negative and then have a massive rally towards 14k (and even 20k) by the end of the year. My reasoning is that the liquidity from alts will flow back to BTC, along with all the stablecoins that have flooded the market and the reduced sell pressure due to the halving will take Bitcoin much higher regardless of what traditional markets do. Essentially tons of liquidity + Bitcoin being cheap relative to most other assets + S2F/4year cycle + more printing/banks collapsing could lead to a massive bull run.
The main problem Bitcoin is facing right now is that there are still quite a few longs and that alts aren’t done deflating vs the USD (they will deflate more vs BTC later). Of course that isn’t the only issue as we are getting into the ‘Insolvency phase’ Raoul Pal has talked about a lot. More lockdowns & Covid not being under control, economies facing issues & unrest, too much debt and all that right before the most ‘heated’ US election of the last 40+ years. All that is happening right when the USD was trying to bottom at a key support area (92 on DXY) and at the moment it looks like it has confirmed its reversal.
Now let’s get into traditional markets!
1) Bonds – It is very clear that they are still in an uptrend. They are sucking more liquidity out the system and the Bond market is predicting deflation. It isn’t buying any of the nonsense from the Fed about money printing or achieving their inflation targets. Even if bonds start selling off because of inflation, due to the size of the market and how high they are along with the Risk Parity funds… this could be devastating. Real rates going up definitely won’t be nice and in my opinion rates will go negative (so bonds higher).
2) Forex– EURUSD seems to be breaking down after from what it looks to be distribution / round top at key resistance (horizontal + diagonal + Yearly R3). GBPUSD is at support but looking weak. JPYUSD is slowly breaking out (not USDJPY). USDCNH bottomed right at key support and gap fill (+Yearly S1). USDMXN & USDZAR bounced hard, but still in a downtrend (they just became too oversold and hit key support). USDTRY keeps going higher and higher as Turkey’s economy is suffering and their FX reserves are depleted.
My view is that the Euro could get down to 1.14-1.15 or essentially the DXY getting to 96-97. I’d expect it to bottom there and give at least a strong bounce, because if not... we are in big trouble globally. The Yen going up isn’t bullish in general and I’d consider it a more bearish signal than the USD itself going up. The Yuan bottomed at key support so there isn’t that much to say. Although I was seeing a potentiam USD bounce coming vs EM currencies, I didn’t expect it to be that strong and I didn’t take as much profit as I should have (on the rest I was stopped out)
3) Stocks – My final targets based on my latest analysis was 3180 for SPX and 10400-10600 for NDX. SPX has filled all the major gaps but could go lower, while the NDX has hit the top of the log channel and bounced nicely so far… Yet I don’t think it will be that easy and the reason is that until now other stock markets hadn’t really moved but were sitting in a tight range between key support & resistance. For most the support has broken and they aren’t looking great. Today the Nasdaq has fallen less than most other indices including DJI & SPX. At the same time bank stocks especially look like they are in big trouble, something I can’t ignore.
So far I’ve been of the opinion that NDX will go to 19k after this healthy and expected correction is over, and I still believe that as long as it doesn’t close below 10k this is possible. 9950-10200 is a really nice area for a potential bottom and a max pain scenario. 10-20% corrections in a parabolic run seem pretty normal and we’ve seen that with BTC in late 2017 as well as NDX in 1999. Finally the VIX is still pretty low compared to the environment we are in and I’d expect to to hit 50 before markets bottom.
4) Metals – Gold and Silver took a big hit and I think it is normal based on how the USD moved. However it isn’t just that they dipped a lot, but that they both lost key support and their next support is much lower. For Gold it is at 1820 (short term) and then 1740-1780. For Silver below 23 I think 19 is coming which was the key breakout zone (throw back into the accumulation zone). Both metals got extremely overbought really quickly and their run was unsustainable, although I believe both will go much higher in 2021.
So as you can see everything is aligning pretty well for a bearish case. Dollar up, everything corrects pretty hard after getting extremely overbought and then the trend resumes to the upside. As stocks have been falling for more time and they aren’t as expensive, they might suffer a bit less… but a 2-3% dollar move will easily cause a 5-20% move down for most assets (including crypto). Right now I don’t wanna get into a doom scenario where stocks crash completely as I don’t believe it is likely (yet). It is better to go step by step and follow my initial plan which is to play the bounce when EURUSD gets to 1.14-1.15.
Even though I’ve been bearish/neutral since the beginning of September (in the short/medium term), I’d also like to say that things might not be as bad as I believe they are. Bitcoin is still above 10k and shitcoins are getting quite oversold (short term). It could test 9.2-9.8k and then bounce hard, without having to go to 7-8k. Maybe the shake out/bounce of USD vs EM is over and it is about to roll over. Maybe the Euro is confusing/chopping everyone before it breaks above its resistance. Maybe this was a major shake out for Silver and Gold, to sweep the support and slowly reclaim it. Maybe touching the top of the NDX log channel and filling the major gaps were enough for the market top bottom. In conclusion, things are looking bleak short term, yet we must not forget that for now the long term trends are still bullish for most of these assets.
Thanks a lot for reading and don’t forget to check out CryptoCube (io), a crypto talent aggregator where you can find interesting articles to read and coaches for anything related to crypto!
For those that have read my previous posts you’d know that I’ve been bearish/neutral and tried to have a more ‘step by step’ approach as the situation was a bit tricky. To me it was clear that the altcoin cycle had turned, but I wasn’t sure for BTC as I want to see its reaction on the 11.1-11.5k resistance zone. When it comes to alts there isn’t much to commend as it was extremely clear for several days, if not weeks that the first mini cycle (out of the 3) was over. In my opinion it will take alts quite some time to really recover although there will be some strong bounces on the way down.
By the way things look right now I’d expect Bitcoin to dip to the 7-8k area, wipe the longs, take premiums deeply negative and then have a massive rally towards 14k (and even 20k) by the end of the year. My reasoning is that the liquidity from alts will flow back to BTC, along with all the stablecoins that have flooded the market and the reduced sell pressure due to the halving will take Bitcoin much higher regardless of what traditional markets do. Essentially tons of liquidity + Bitcoin being cheap relative to most other assets + S2F/4year cycle + more printing/banks collapsing could lead to a massive bull run.
The main problem Bitcoin is facing right now is that there are still quite a few longs and that alts aren’t done deflating vs the USD (they will deflate more vs BTC later). Of course that isn’t the only issue as we are getting into the ‘Insolvency phase’ Raoul Pal has talked about a lot. More lockdowns & Covid not being under control, economies facing issues & unrest, too much debt and all that right before the most ‘heated’ US election of the last 40+ years. All that is happening right when the USD was trying to bottom at a key support area (92 on DXY) and at the moment it looks like it has confirmed its reversal.
Now let’s get into traditional markets!
1) Bonds – It is very clear that they are still in an uptrend. They are sucking more liquidity out the system and the Bond market is predicting deflation. It isn’t buying any of the nonsense from the Fed about money printing or achieving their inflation targets. Even if bonds start selling off because of inflation, due to the size of the market and how high they are along with the Risk Parity funds… this could be devastating. Real rates going up definitely won’t be nice and in my opinion rates will go negative (so bonds higher).
2) Forex– EURUSD seems to be breaking down after from what it looks to be distribution / round top at key resistance (horizontal + diagonal + Yearly R3). GBPUSD is at support but looking weak. JPYUSD is slowly breaking out (not USDJPY). USDCNH bottomed right at key support and gap fill (+Yearly S1). USDMXN & USDZAR bounced hard, but still in a downtrend (they just became too oversold and hit key support). USDTRY keeps going higher and higher as Turkey’s economy is suffering and their FX reserves are depleted.
My view is that the Euro could get down to 1.14-1.15 or essentially the DXY getting to 96-97. I’d expect it to bottom there and give at least a strong bounce, because if not... we are in big trouble globally. The Yen going up isn’t bullish in general and I’d consider it a more bearish signal than the USD itself going up. The Yuan bottomed at key support so there isn’t that much to say. Although I was seeing a potentiam USD bounce coming vs EM currencies, I didn’t expect it to be that strong and I didn’t take as much profit as I should have (on the rest I was stopped out)
3) Stocks – My final targets based on my latest analysis was 3180 for SPX and 10400-10600 for NDX. SPX has filled all the major gaps but could go lower, while the NDX has hit the top of the log channel and bounced nicely so far… Yet I don’t think it will be that easy and the reason is that until now other stock markets hadn’t really moved but were sitting in a tight range between key support & resistance. For most the support has broken and they aren’t looking great. Today the Nasdaq has fallen less than most other indices including DJI & SPX. At the same time bank stocks especially look like they are in big trouble, something I can’t ignore.
So far I’ve been of the opinion that NDX will go to 19k after this healthy and expected correction is over, and I still believe that as long as it doesn’t close below 10k this is possible. 9950-10200 is a really nice area for a potential bottom and a max pain scenario. 10-20% corrections in a parabolic run seem pretty normal and we’ve seen that with BTC in late 2017 as well as NDX in 1999. Finally the VIX is still pretty low compared to the environment we are in and I’d expect to to hit 50 before markets bottom.
4) Metals – Gold and Silver took a big hit and I think it is normal based on how the USD moved. However it isn’t just that they dipped a lot, but that they both lost key support and their next support is much lower. For Gold it is at 1820 (short term) and then 1740-1780. For Silver below 23 I think 19 is coming which was the key breakout zone (throw back into the accumulation zone). Both metals got extremely overbought really quickly and their run was unsustainable, although I believe both will go much higher in 2021.
So as you can see everything is aligning pretty well for a bearish case. Dollar up, everything corrects pretty hard after getting extremely overbought and then the trend resumes to the upside. As stocks have been falling for more time and they aren’t as expensive, they might suffer a bit less… but a 2-3% dollar move will easily cause a 5-20% move down for most assets (including crypto). Right now I don’t wanna get into a doom scenario where stocks crash completely as I don’t believe it is likely (yet). It is better to go step by step and follow my initial plan which is to play the bounce when EURUSD gets to 1.14-1.15.
Even though I’ve been bearish/neutral since the beginning of September (in the short/medium term), I’d also like to say that things might not be as bad as I believe they are. Bitcoin is still above 10k and shitcoins are getting quite oversold (short term). It could test 9.2-9.8k and then bounce hard, without having to go to 7-8k. Maybe the shake out/bounce of USD vs EM is over and it is about to roll over. Maybe the Euro is confusing/chopping everyone before it breaks above its resistance. Maybe this was a major shake out for Silver and Gold, to sweep the support and slowly reclaim it. Maybe touching the top of the NDX log channel and filling the major gaps were enough for the market top bottom. In conclusion, things are looking bleak short term, yet we must not forget that for now the long term trends are still bullish for most of these assets.
Thanks a lot for reading and don’t forget to check out CryptoCube (io), a crypto talent aggregator where you can find interesting articles to read and coaches for anything related to crypto!
Comment:
Metals don't look great and USD is looking better. As long as it doesn't go up more than 2.5% we are ok (since its September bottom it is up ~1.5%). The reason why things weren't that bad is because EM currencies are up since then although EUR, GBP etc have suffered.
The good thing is that volatility overall is low. Maybe it explodes and we get big downside... who knows. To me EM is still more attractive as their trend is still up.
Gold doesn't look great but could go up to 1935 & EURUSD up to 1.183 before going lower
The good thing is that volatility overall is low. Maybe it explodes and we get big downside... who knows. To me EM is still more attractive as their trend is still up.
Gold doesn't look great but could go up to 1935 & EURUSD up to 1.183 before going lower
Comment:
What Bitcoin has going for it is that it has broken out of key resistance and sellers in the 10k area clearly exhausted. Negative funding shows that even if Bitcoin could take a leg lower, the bottom wouldn't be far. Stablecoins and the liquidity from alts have definitely accelerated re-accumulation. On chain metrics show a very healthy and bullish picture, so if anyone is left to sell is mostly non-crypto funds & leveraged traders. It now has an inflation rate close to Gold's in an environment where MMT is coming.
There is a bearish case to be made and I don't think we are in the clear yet, but I doubt it will take too long for us to find out. After the expiration I expect more clarity for sure, especially as Gold & Stocks get near my buy zones (XAU - 1780-1820 / SPX 3100-3180 / NDX 10200-10400). What many people discount is that overall we might see ranging conditions for a few more weeks or even months in traditional markets leading to the election, as there is uncertainty, Covid is on the rise in Europe, Banks are under pressure, there is the fight for the stimulus and of course we have just come out of massive bullish trends that have turned into short term bearish trends. Finally one thing people are underestimating is a contested election, which could turn very ugly and have a massive negative impact on markets.
Right both Bitcoin and Ethereum are at resistance. There is nothing I see right now that tells me either should go up or down. One thing I had missed was that I thought the double bottom at 10200 had been swept. Actually I looked the Coinbase chart and I thought that occured on all exchanges, forgetting to check elsewhere and that led me to have the wrong view on certain aspects. Now on several exchanges right above the gap there are double bottoms that haven't been swept yet (which makes the situation quite tricky. Bitcoin looks trapped so more chop between 9.5-11.5k isn't impossible before a decisive breakout.
Something has changed for sure in my analysis, is my view on the Turkish Lira in the short term. Today the Turkish Central Bank raised the repo rate by 2% and that led to a correction that could be deeper. Looking to buy lower for now...
For stocks there are some key areas I am looking to buy are SPX 3100-3180 & NDX 10200-10400 as they are a combination of untested areas, gaps & are above multiple bottoms. The truth is that there is also some liquidity higher as well, so I am not ruling that scenario out before there is a final dip.
The USD has hit some key resistance and could fall before it goes up again. Some key pairs have retested some untested break out areas and have bounced against the USD, so there is definitely some room to the upside here. No idea how much or whether that was the top for the USD, but for it looks like it could had a short term correction before moving higher to hit 96-97 on the DXY. Finally gold has room to the downside and my minimum target is 1820.
There is a bearish case to be made and I don't think we are in the clear yet, but I doubt it will take too long for us to find out. After the expiration I expect more clarity for sure, especially as Gold & Stocks get near my buy zones (XAU - 1780-1820 / SPX 3100-3180 / NDX 10200-10400). What many people discount is that overall we might see ranging conditions for a few more weeks or even months in traditional markets leading to the election, as there is uncertainty, Covid is on the rise in Europe, Banks are under pressure, there is the fight for the stimulus and of course we have just come out of massive bullish trends that have turned into short term bearish trends. Finally one thing people are underestimating is a contested election, which could turn very ugly and have a massive negative impact on markets.
Right both Bitcoin and Ethereum are at resistance. There is nothing I see right now that tells me either should go up or down. One thing I had missed was that I thought the double bottom at 10200 had been swept. Actually I looked the Coinbase chart and I thought that occured on all exchanges, forgetting to check elsewhere and that led me to have the wrong view on certain aspects. Now on several exchanges right above the gap there are double bottoms that haven't been swept yet (which makes the situation quite tricky. Bitcoin looks trapped so more chop between 9.5-11.5k isn't impossible before a decisive breakout.
Something has changed for sure in my analysis, is my view on the Turkish Lira in the short term. Today the Turkish Central Bank raised the repo rate by 2% and that led to a correction that could be deeper. Looking to buy lower for now...
For stocks there are some key areas I am looking to buy are SPX 3100-3180 & NDX 10200-10400 as they are a combination of untested areas, gaps & are above multiple bottoms. The truth is that there is also some liquidity higher as well, so I am not ruling that scenario out before there is a final dip.
The USD has hit some key resistance and could fall before it goes up again. Some key pairs have retested some untested break out areas and have bounced against the USD, so there is definitely some room to the upside here. No idea how much or whether that was the top for the USD, but for it looks like it could had a short term correction before moving higher to hit 96-97 on the DXY. Finally gold has room to the downside and my minimum target is 1820.
Comment:
My summary of the week is that so far the USD has completed ~70% of its move up, while equites ~60% of their move down. Of course that's if we assume that equities are going to move much higher. My plan has been clear as to which areas matter the most and what things I'd want to see to consider the correction over. Personally I don't wanna catch a falling knife, I wanna pick it off the floor. What is interesting is that crypto has been leading the way for equities, by pretty much putting in local bottoms and local tops before equities which then follow.
Bitcoin is in a much better position than most other assets right now as it isn't really in a downtrend, while everything else is clearly is in a short term downtrend (alts included). The last 1-2 days alts had a 10% bounce vs BTC, but imho it is a dead cat bounce. I've said before and I'll say it again: until I see ETHUSD close above 390 I'll wait for 285 & 250.
Of course many will bounce hard (many tested their 200-300 DMAs or key untested areas or previous highs), while being oversold. Many have been trending down since mid August or even mid July... Bull Market Percentage bottomed at 3% for 3 days in a row and today it went up to 4% which could mean alts have some more room to the upside before rolling over again. In my opinion alts won't bottom without going sideways in BTC or USD before they start rallying again, but I could be wrong and everything rallies together once the correction is over. What I think most people underappreciate is that alts were in an uptrend against BTC since Sep 2019 and that trend has most likely reversed. Yes the key main alt season lasted for 3-3.5 months, but the whole trend lasted much longer... so I can't see how alts will go back to trending immidiately.
Another thing I've made very clear from my comments and ideas, is that NDX could rally to 11650 & EURUSD even up to 1.183 and then roll over again. People underestimate the probability of being into a choppy & volatile market that goes in all directions as we head into the election. The trends are pretty clean so far, but at the same time we've gotten several strong bounces so far and we aren't seeing a fragile market that is about to crash like it did in March.
To close things up, I'd like to make clear one thing: the Central banks don't have your back. This is a deadly illusion/dellusion that everyone believes in and is dead wrong. The Fed doesn't print money contrary to what most people think, and most stock markets other than the US have seen very little growth or no growth over the last 10-20 years, while others have been in a massive depression. Of course that's in nominal terms, and not if you look at it in USD terms as then the situation looks a lot worse. The SPX 400 & Russell 2000 haven't made new highs since 2018. Dow Jones is barely above its 2018 higs and didn't go above its 2020 high. The system is fragile and central banks have done nothing to fix it... My point is that my bullish case might fail and things keep going down as many European indices looks pretty ugly. Maybe the DXY doesn't stop at 97 and goes up much much higher making everything else go down. If you want to learn more, go watch the recent videos by Brent Johnson, Steven van Metre, Jeff Snider and Emil Kalinowski so that you can final see what most people don't. As for me I am preparing a few nice posts about Bitcoin/Altcoin cycles, as well Global stock markets & QE & Dollar cycles
Bitcoin is in a much better position than most other assets right now as it isn't really in a downtrend, while everything else is clearly is in a short term downtrend (alts included). The last 1-2 days alts had a 10% bounce vs BTC, but imho it is a dead cat bounce. I've said before and I'll say it again: until I see ETHUSD close above 390 I'll wait for 285 & 250.
Of course many will bounce hard (many tested their 200-300 DMAs or key untested areas or previous highs), while being oversold. Many have been trending down since mid August or even mid July... Bull Market Percentage bottomed at 3% for 3 days in a row and today it went up to 4% which could mean alts have some more room to the upside before rolling over again. In my opinion alts won't bottom without going sideways in BTC or USD before they start rallying again, but I could be wrong and everything rallies together once the correction is over. What I think most people underappreciate is that alts were in an uptrend against BTC since Sep 2019 and that trend has most likely reversed. Yes the key main alt season lasted for 3-3.5 months, but the whole trend lasted much longer... so I can't see how alts will go back to trending immidiately.
Another thing I've made very clear from my comments and ideas, is that NDX could rally to 11650 & EURUSD even up to 1.183 and then roll over again. People underestimate the probability of being into a choppy & volatile market that goes in all directions as we head into the election. The trends are pretty clean so far, but at the same time we've gotten several strong bounces so far and we aren't seeing a fragile market that is about to crash like it did in March.
To close things up, I'd like to make clear one thing: the Central banks don't have your back. This is a deadly illusion/dellusion that everyone believes in and is dead wrong. The Fed doesn't print money contrary to what most people think, and most stock markets other than the US have seen very little growth or no growth over the last 10-20 years, while others have been in a massive depression. Of course that's in nominal terms, and not if you look at it in USD terms as then the situation looks a lot worse. The SPX 400 & Russell 2000 haven't made new highs since 2018. Dow Jones is barely above its 2018 higs and didn't go above its 2020 high. The system is fragile and central banks have done nothing to fix it... My point is that my bullish case might fail and things keep going down as many European indices looks pretty ugly. Maybe the DXY doesn't stop at 97 and goes up much much higher making everything else go down. If you want to learn more, go watch the recent videos by Brent Johnson, Steven van Metre, Jeff Snider and Emil Kalinowski so that you can final see what most people don't. As for me I am preparing a few nice posts about Bitcoin/Altcoin cycles, as well Global stock markets & QE & Dollar cycles
BTCUSD just swept the double bottom at 10200 and bounced, but still closed below resistance. As 11100-11200 was retested, the only untested areas or gaps that are left on the chart are lower. In the past 11200 & 11700 were untested / gaps... and this time around they were filled, hit R1 Yearly and then swept the high at 12400. Not much to squeeze really. But when it comes to what happened lower, even though 4-6k don't really have anything after bouncing at S1, retesting the VP PoC at 3900, hitting the 300 WMA and and the entire 4200-4400 untested area, then reclaiming 5700 and then 6400. The key areas in my view are 9800 (gap + on some charts there wasn't an SFP at the quadruple bottom right above), 9500, 9200, 7800, 7300 & potentially 5500 (potentially!!). BTC is showing incredible strength and funding is negative while we've clearly broken out. Maybe I am very wrong, but what if we go down there? Are you prepared?
ETHBTC looks quite bad and pretty much in a downtrend. I don't want to buy anything above 0.027 and I think it could go even lower. ETHBTC has 3 untested areas waiting to be tested.
EURUSD clearly breaking down here. I don't think that SFP after SFP is showing any strength. Yes there could be a squeeze higher and the drop takes even longer, but I can't see how this won't go lower. Until I see EURUSD close above 1.186 I don't plan to long EURUSD, yet even then I'd struggle to want to play it on the upside.
Gold looks like it is trying to close back above support right after it had a mega SFP. No impossible, but definitely wouldn't wanna play the upside until I see it close above 2000. Until then I believe it won't close above 1935 and it will go down to 1820 minimum.
For NDX all I've got to say is that it completed its 15% correction and touched the top of the log channel (same % as back in 1998 when it touched the broken log diagonal from above 3 times before it went parabolic). It is still in a resistance zone and I don't believe it is over yet. Yes it had a nice SFP in a nice support area too, but both SPX and NDX didn't go deep enough. Today NDX actually closed up whle the rest down, which overall is positive for the long term. Yes I believe it will go deeper, but not in an unhealthy and crazy way like what we saw in March if I want to see my bullish long term view play out. The longer it takes and the more it chops, the better.