Are we going to make new local lows?
The boring stages of the market are still continuing. Crypto is literally doing nothing, but this is one of the most important times to be active in the market. Reason for that is, people are losing interest, markets are slowely bleeding towards the downside, but this brings the biggest opportunities. The biggest returns are made when nobody is showing interest in the market and not when your neighbor thinks he should get into the market. Looking at the chart, we can say that we are in this building period. We are trading sideways for months already. BTC dominance is rising and alts are heaving a really tough time. If you ask me, it is really important that Bitcoin is going to pick a side. In my opinion, we ar not in a so called manipulation phase at the moment, so I would be looking at lower prices for Bitcoin on the higher timeframe. In todays tradeletter we are going to discuss which levels I am going to look at if we get that drop.
Why I think that we are not in a manipulation phase
A lot of people on social media were talking about the fact that we were in a so called manipulation phase once we dropped underneath the range that we were trading at. At first, yes that was a very good possibility. However most of the times, the so-called manipulation phase, plays out a lot quicker. We are still ranging and are making several bearish retests without any success of breaking out.
I would like to refer back to the period between March and June to elaborate a bit more on the fact why I think that we are not in a manipulation phase. We can see that we were ranging for a long period of time since the month of March up until May. In May we got the initial drop. We took out liquidity on the downside and BTC tried to break out towards the upside multiple times without any success. This led to a new breakdown. Afterwards we got the strong push towards the upside.
Looking at the current situation, we can see that it is quite similar as the situation that I described above. We ranged for quite some time, this is range 1. We dropped beneath that range and are making several bearish retests without any success of breaking higher. This makes me think that we are going to see another drop.
We are still trading in a premium
The current dealing range of Bitcoin tells us that we are still trading at premium prices. When we draw our fibonacci retracement tool over the swing high and swing low, we can see that that we are still trading above the 0.5 level of the fibonacci tool which indicates that we are still in an ‘expensive’ market. In trading you also want to buy when something is cheap and in this case we are in discount when we are trading in a discount, that is the regions underneath the 0.5 level of the fib.
This is the main level I am personally looking at
Personally, I would be looking for buys at a discount. So I would like to see a drop beneath the 0.5 level of the fib tool that was mentioned in the previous paragraph. The main area where I would scale in some longs is the daily imbalance between 27-28.3K. That could be the real manipulation phase before we are going to see the move towards potential higher prices.
DXY is insanely strong
Something that is noticeable in a positive way for crypto is the fact that the market is relatively stable, whilst the dollar is extremely strong. A couple of weeks ago I said that I was bullish on the DXY index and it showed. Personally I do not think that the ‘bull run’ is over this month. We can still seek higher prices and the first targets I am looking at are 103.57 and 104.70.
I am very curious to see what crypto is doing once we break even higher, since normally when we have a strong dollar we see weakness on crypto, for now it is not really the case yet.
In conclusion, it are tough times in the market and it is very difficult to manouvre yourself within the market, but stay calm, keep faith and you will reap the rewards in the long run.
See you guys next week!
Written by: Daan Foppen
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