I'm back with another warning and yes I know I have been repeating myself so here's the latest update...
Bitcoin and the overall crypto market are playing a game of ping pong with the market makers actively sourcing liquidity from the futures market. This creates choppy price action without a real direction within the local range between 45K and 34K. These types of environments are far from ideal for day trading and it is this type of price action that has blown up many accounts over the past months. In my opinion you should stay away from such plays and focus on the long term - at least that's what I'm doing.
Currently Bitcoin is inside a pennant or symmetrical triangle and should be continuing its trend down next week. With the FOMC opening the next trading week we could see some high volatility incoming soon. With inflation through the roof (and no that's not just geopolitical pressure but mostly policy or lack thereof) the Fed WILL TAPER and RATE HIKE AGGRESSIVELY. The Fed has been sitting about for too long hoping for transitory inflation (what a joke), fading supply chain issues (wasn't the real problem to begin with) and aiming for a soft landing. By doing so, they left too much time on the table doing absolutely nothing, that now they are forced to act decisively or completely lose credibility.
This means there is no bullish narrative for the risk-on market (in the mid / short term) regardless of what some "experts" are trying to tell you. Market makers have been preparing for next week since last October so my suggestion is you come prepared as well (whatever that means for your portfolio and your situation). We got some simple levels here that will tell you what will happen: confirmed break of 45K > 56K (very unlikely but never say never), confirmed break of 37K > 30K. Be ready and good luck.
Ps. don't get into risky trades, take the outmost caution, you don't need to make money now, you should make money in the long run.
For more info check the links below.
Bitcoin and the overall crypto market are playing a game of ping pong with the market makers actively sourcing liquidity from the futures market. This creates choppy price action without a real direction within the local range between 45K and 34K. These types of environments are far from ideal for day trading and it is this type of price action that has blown up many accounts over the past months. In my opinion you should stay away from such plays and focus on the long term - at least that's what I'm doing.
Currently Bitcoin is inside a pennant or symmetrical triangle and should be continuing its trend down next week. With the FOMC opening the next trading week we could see some high volatility incoming soon. With inflation through the roof (and no that's not just geopolitical pressure but mostly policy or lack thereof) the Fed WILL TAPER and RATE HIKE AGGRESSIVELY. The Fed has been sitting about for too long hoping for transitory inflation (what a joke), fading supply chain issues (wasn't the real problem to begin with) and aiming for a soft landing. By doing so, they left too much time on the table doing absolutely nothing, that now they are forced to act decisively or completely lose credibility.
This means there is no bullish narrative for the risk-on market (in the mid / short term) regardless of what some "experts" are trying to tell you. Market makers have been preparing for next week since last October so my suggestion is you come prepared as well (whatever that means for your portfolio and your situation). We got some simple levels here that will tell you what will happen: confirmed break of 45K > 56K (very unlikely but never say never), confirmed break of 37K > 30K. Be ready and good luck.
Ps. don't get into risky trades, take the outmost caution, you don't need to make money now, you should make money in the long run.
For more info check the links below.
Comment:
Another reason for my bearish stance was the macro over extension of the S&P500, which is my preferred index to check the health of the equities market.
In January, when the S&P500 was still at 4600 I posted the Wyckoff distribution schematic, being the first one to see this, as far as I know. The schematic has played out perfectly with the first major correction coming in just after I posted and in line with my SOW (sign of weakness) and also the retrace hit my LPSY (psycholigical low) target. Now we entered phase E which inhibits the most fierce corrections.
You can check the schematic in the chart below and also more of these charts on my tradingview & twitter profile.
In January, when the S&P500 was still at 4600 I posted the Wyckoff distribution schematic, being the first one to see this, as far as I know. The schematic has played out perfectly with the first major correction coming in just after I posted and in line with my SOW (sign of weakness) and also the retrace hit my LPSY (psycholigical low) target. Now we entered phase E which inhibits the most fierce corrections.
You can check the schematic in the chart below and also more of these charts on my tradingview & twitter profile.
Comment:
The day after the FOMC. We had a hawkish Fed and as expected the 25 BPS hike. Now, many analysts might say that Powells comments on the US economy are positive. Which is indeed true, the labor market is strong: there are 1.7 jobs for any person looking for one and overall growth is still present at relative strong levels. For the Fed this means that they will reduce their balance sheet at the upcoming meeting in April and will further hike interest rates at the next FOMC.
If we look at the market response we see that both stock and crypto corrected upwards. Many traders or investors will see this as a "buy" signal and my analysis can be thrown in the bin. Personally, I disagree. First, we did not hit the apex of the pattern nor did we see a confirmed break out from 37 or 45K. Factually we are still in the chop zone and open interest on futures and options are still leading price action for the weeks to come. Bitcoin can be stuck within this range and pattern till the end of April, testing patience of many traders - patience - a skill that not many retail traders have.
With the reduction of the Fed's balance sheet and the interest rate hikes of this year we can conclude that the market needs to prepare for at least 5 till up to 10 rate hikes only this year. This is because a reduction of the Fed's balance sheet counts as a rate hike as well, which was clearly mentioned by Powell in yesterday's press conference. As the market priced in up to a 50 BPS hike, market makers now have room for short term upside, depending on the open interest in both futures and options market. A further analysis of the order book, futures and options market will come later this week.
In conclusion, we have room for short term upside and downside blurring a defined trend. However, in the mid and long term I still expect further downside, especially in the equity markets. With inflation damage control being at the center of Monetary policy right now, we can only expect less growth and less liquidity in the markets in the long term creating room for more downside towards yearly means. Looking at the long term price action of the risk on markets we are still overextended, which means we still have a way to go before we really can speak about buying a macro bottom. I do not exclude a bear market for the risk on market extending into 2023, where most of the pain of hawkish Fed will be felt. It will take at least half a year or more before these interest rate hikes and balance sheet reduction will be felt in the real economy, both in price stability, the labor market and in terms of revenue for the big corporations. The traders that can be patient and let the market come towards them and wait for buys at macro lows will be rewarded.
If we look at the market response we see that both stock and crypto corrected upwards. Many traders or investors will see this as a "buy" signal and my analysis can be thrown in the bin. Personally, I disagree. First, we did not hit the apex of the pattern nor did we see a confirmed break out from 37 or 45K. Factually we are still in the chop zone and open interest on futures and options are still leading price action for the weeks to come. Bitcoin can be stuck within this range and pattern till the end of April, testing patience of many traders - patience - a skill that not many retail traders have.
With the reduction of the Fed's balance sheet and the interest rate hikes of this year we can conclude that the market needs to prepare for at least 5 till up to 10 rate hikes only this year. This is because a reduction of the Fed's balance sheet counts as a rate hike as well, which was clearly mentioned by Powell in yesterday's press conference. As the market priced in up to a 50 BPS hike, market makers now have room for short term upside, depending on the open interest in both futures and options market. A further analysis of the order book, futures and options market will come later this week.
In conclusion, we have room for short term upside and downside blurring a defined trend. However, in the mid and long term I still expect further downside, especially in the equity markets. With inflation damage control being at the center of Monetary policy right now, we can only expect less growth and less liquidity in the markets in the long term creating room for more downside towards yearly means. Looking at the long term price action of the risk on markets we are still overextended, which means we still have a way to go before we really can speak about buying a macro bottom. I do not exclude a bear market for the risk on market extending into 2023, where most of the pain of hawkish Fed will be felt. It will take at least half a year or more before these interest rate hikes and balance sheet reduction will be felt in the real economy, both in price stability, the labor market and in terms of revenue for the big corporations. The traders that can be patient and let the market come towards them and wait for buys at macro lows will be rewarded.
Comment:
We saw a nice relief rally from Bitcoin fuelled by the usual bullish narratives. Day traders have jumped onboard hoarding billions of liquidations at around 40/39K, a level to revisit in the near future. If we look at the structure, we see the pattern is still intact, the resistance line holds true for now with price being stable below it. We also had a tap of the 45K level in the New York session which indicates a local top. Next week we will monitor price action around these resistance level; potentially making a last move upwards creating an M formation that will reverse Bitcoin back below 40K. If we are able to break 45K and close a 2-daily candle above it, I will hedge accordingly. For now, nothing has changed and we are still in the chop, whether you like it or not.
Comment:
And we’re back inside the pattern! Bitcoin got rejected around the bull market support band: while initially looking to hold support at the top of the pennant, it created a M pattern instead and is going back down to search for buys. My opinion has not changed, I have been sitting on my hands for quite a while and thats the most boring thing to do. Its also the reason why I didnt post recently. If you read through my comments and description, you see how I view the situation. As warned, the fed is mega hawkish and they have no other choice, liquidity will be drained across the board and potentially we will see the first macro bear market since 2008. Although I’m fundamentally bullish on the crypto market I cant dismiss the macro picture. This is not bad news, its an opportunity for those who can stay put and call a macro bottom for when we get there. I will post when I personally think we can get some value buys in this market but right now we are a long way off. To be continued.
Comment:
Bitcoin broke down below the pennant/symmetrical triangle as expected. Ofcourse market maker ran their little bull run to distribute their tokens and trap traders. We have exactly what I warned for, just the price isnt there yet. Mega hawkish fed as I’ve been waiting/preparing for, for over a year - yes you read that right, go check when I called tops on BTC on April 14, 2020. By any means dont listen to all these so called “crypto influencers” cause they get paid from your money. As a trader, always stay neutral and above all rational, when you feel euphoric in anyway its probably time to get out. I close updates on this post now apart for a last one for when we hit 30K sometime this year. When is always less relevant than if.
Comment:
Uh... wait a second, was that a retest of previous support turning into resistance!? Sure looks like it... this story continues...
Comment:
double retest, prepare for the lower bound of the current range...
Comment:
People didn't believe me right? right?
Comment:
You were warned.
Comment:
Dear friends, this is your call!! Please check my latest analyses on my profile and check the links on my profile or bio. Theres lots of new info there - do with it what you want.
Important update on Twitter on 10x Club, a weekly newsletter curated by me containing research & analytics on the crypto market & the amazing opportunities during the bear market - Check my Twitter or website link below:
This means that the current analysis is not something "new" or you should go heavily short. What I am saying is that (according to my data) we haven't bottomed yet and we still have more downside in crypto; whether that happens next week or next month, principle stays the same.
Check my idea below of early December 2021 where I warned for a correction in the alt coin market and price action has been following my expectation: