TradingAlpha

Aggressive Short squeeze pending; expect 20% gain

Long
KRAKEN:XRPUSD   XRP / U.S. Dollar
I have been trading markets for 15 years now. Only thing I am certain of is that markets rise and fall. Regardless of market cycle, investor psychology tends to swing from rising optimism followed by growing pessimism. You might think that is simplistic and unhelpful! It is clear that in recent month over all crypto market has been in a secular down trend. That does not mean patterns of up trend and down trends are not formed within the said cycle where by trends tend to serve as the catalyst for their own reversal. Looking at potential up legs and down legs in crypto market. I see massive potential for temporary exponential gains, one following the other, on the back of broad short squeeze - in most cases automated on the back of psychological points where stop losses have been positioned.

As the general sentiment seems to be bearish , one can be certain the continued pessimism will only bread large volume of short positioning among traders. That in my opinion will serve as the cause and catalyst of the short squeeze, perhaps amplified by incoming by orders that could breed an element of euphoria among investors. The higher the markets and breaks short term resistance points the more resistance is built until the short term rally loses steam. The rally, short term by nature, will be deceiving to some - especially to the trader that oblivious the underlying dynamic and mechanics of short selling.

I expect this rally to an average of 17-20% subject to variations depending the scale of short positioning in the market. I would certainly buy the rally. Difficult thing is to identify the right exit point.