With the stock market having "topped out" last week and now crypto breaking key channel supports I think it is a good time to reemphasize how crypto has been a leading indicator for the stock market. It is never clear to most until its literally shown as a complete correlation. It's always been difficult to convince the crypto community that their asset could be correlated to the stock market as one of their arguments has been for a store of value.
Now, how about Bitcoin and Ethereum? Not looking so hot at the moment. Lets dive in a look at some key charts.
I was feeling a little deja vu the other day after realizing that it was this time last year when Bitcoin was supposedly heading to Mars once it topped out at nearly $14,000. Well, Bitcoin isn't on Mars and it also isn't at $14,000 a year later. What's this mean? On the weekly chart below I highlight key dates when Bitcoin "broke out" and "topped out."
Notice how these dates are very similar. The most surprising find was the number of days each rally lasted. The 2019 rally lasted approximately 84 days while the 2020 rally lasted 77 days. Interesting.
It may be too early to call this a "bearish" rally but I always think back to a excerpt from Frost and Pretcher's Principle, "if the analyst can easily say to himself, there is something wrong with this market , chances are it's a B wave."
This is what I said to myself last summer and again this summer in combination to the stock market. Once retail begins to look smarter compared to the pros...there is something wrong.
My outlook for Bitcoin has to be....Bias: Bearish.
Ethereum Bulls Dropped the Ball
I like simple charts. Why over complicate it? Below is the weekly chart of Ethereum .
Ethereum has always been my go to when analyzing the strength of the crypto market. On the chart above I'll be honest, it does not look great. Ethereum is yet again posting a new lower high after having nearly retest its December 2018 low in March 2020. We will soon know the true make-up of the current market.
If Ethereum retests the March 2020 low sometime in the next year the pattern above must be taken into strong consideration. A is a continuation pattern and the one above could lead to a substantial drop . The bulls must step in ASAP in order to prevent this case from becoming a reality. Bias: Bearish.
More Charts Coming!
I'll be posting charts almost daily. If you have suggestions please do leave them in the comment section below. Also, do not forget to follow me on Twitter! Have a great day and happy trading!