A Long Weary Road – Bitcoin Ethereum Waves and Decred

Overview:

The pain continues as the crypto market in general shows little signs of recovery.  There is nothing in the charts that show a reversal, so we assume there is likely further pain to the downside for bulls.  It has simply been a long weary road, but eventually this too shall end.  We just don’t know where the road is taking us.

BTCUSD:

The past week has been rather slow and un-eventful.  Often we get to the point where we just want the pullback to 2500 to happen just so we can move on.  It is like “come on already, just get this over with”.

Bitcoin is now testing the previous low, and there is potential to see a double bottom or variation there of, but it is still too early to call.  There is nothing to do but let the market play out.  Again nothing has changed technically.  I also want to be clear, the arrows shown are examples of structures not a connect the dots forecast.

Bearish Continuation?:

IF at the close of the daily candle we see a pinbar formation, a swing back to test 3500 is very possible, but this does not remove or change our bearish position, and could be a corrective sequence in a bearish continuation.  This pattern is valid unless we push through the minor support level of 3950.

Bullish Reversal?:

This is the type of structure we want to see for evidence of a bullish reversal.  A rally or short squeeze to the 3950 level, a higher low and swing to the 4500 area with a higher high.  Now keep in mind, this 4900 is likely to be met with a lot of selling pressure, and a level to look for a pullback.

The depth and breadth of a pullback off a major resistance area will tell the tale, and provide clarity moving forward.  In short how the market reacts after a strong initial rally will provide further insight into market sentiment.

However we are simply guessing here as both the trend and structure are currently very much bearish.  In addition, at this depth and stage of the market, we do not expect a recovery, if it happens, to play out over a couple days.  In other words even if the bullish theory plays out, it is going to take some time. 

ETHUSD:

Ethereum is in a similar situation as it looks to retest the 82.0 area which is interim support.  To be clear there are no traditional support levels here, these are projections of areas to look for reversal formations.

A break of 82.0 and 70.0 is the next level of support or an area to look for a reversal.  We just see no formations that imply this is happening, or going to happen in the near term.

For this reason we remain in bear camp until structures show what we look for in reversal formations. 

Overall Market:

Unlike the stock market, where the overall market is somewhat correlated, cryptos is highly correlated.  Even in bear stock markets, there are numerous stocks or sectors that buck the overall market trend.  In cryptos, not so much.  Sure Waves and Decred have had nice moves over the past couple days, which caught our attention, but almost every other top market cap coin looks like Bitcoin, or Ethereum. 

Waves – Decred:

Waves is definitely bucking the trend here and a close above 2.40 would spark some interest in maybe adding a little to our speculative portfolio.  However buying into a rally like this is often a recipe for FOMO soup.

Decred caught my eye being up 10% on the daily, but a look at the weekly puts it right back into the dog house.  Nothing there yet.

No point in throwing up a bunch of triangles, wave counts, or other patterns that form as markets trend, we only need to look at the current chart structure to recognize these look like crap.  Waves is showing some potential here, but not enough for us to say “let’s take a shot”.    

Summary:

There is nothing to do here but let the market evolve and go through the process of recovery.  It could move lower, we may reverse here and have found a bottom.  In short, bears are very much in control here.

This is completely different than the long consolidation range bound market we had a couple months ago.  There was no clear control over the market, which is why we call it range bound. 

For new investors this can be painful but nothing we have not seen in past market corrections.  I know it does little comfort to say there is a light at the end of the tunnel, or the road were on will soon end.  But it is what it is, and if you do not have the stomach for these types of markets, well why are you in it? 

As far as trading goes, the stock market volatility is creating opportunities.  We have several stocks on our swing trade radar, and have been using our options strategy to accumulate cannabis stocks, and collect some premiums on some beaten down tech and oil companies.  The key is not getting attached to a specific market, but to look for opportunities where ever they are regardless of the instrument used.

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