CME gap is closed, can we continue the rally?

After witnessing a significant upward move over the weekend, we observed a retracement in the market at the beginning of this trading week. This retracement has completely filled the CME gap that occurred over the weekend. The question now is whether we are experiencing a retracement and can expect continuation, or if we are going to make new lows. To answer that question, let's dive into the charts of Bitcoin and Ethereum. We will also discuss the Nasdaq in this trade letter. Enjoy reading!


1D timeframe

As everyone knows, we've had a rather dull price action in the past few weeks with nothing much happening. We consistently held support around the $26.3-26.6K region. Everyone started anticipating a further breakdown, but the opposite occurred. We saw an upward impulse over the weekend, but how did this come about? Around the temporary bottom, many people started shorting, expecting lower prices, and this resulted in a liquidation event that led to an acceleration to the upside.

1h timeframe short scenario

As mentioned earlier, we see the price dropping a bit, but what can we expect? Honestly, I see two scenarios, and it's difficult to say with certainty which one has a greater chance. First, we could say that we have traded within a range for a period of time. We saw a breakout over the weekend, where we took liquidity. We saw deviation above the range high and have now fallen back into the range. Returning to the range high could provide a short opportunity on the bearish retest.

4h timeframe long scenario

The area to go long is actually now, but I find the situation quite tricky, mainly because you quickly encounter resistance again. However, there are certainly arguments to say that going long is the way to go. We finally have a structure shift after breaking a high, and we are now seeing a bounce in the FVG (floating volume gap). This is an area that needs to be maintained if we want to see higher prices.


4h timeframe

In my opinion, Ethereum looks slightly better. Looking at the chart, we can see that it also had an impulse over the weekend, but Ethereum manages to hold higher during this pullback and is currently in a zone to go long. If we get a bounce here, I will primarily look at the $1940 level.


1D timeframe

One of the strongest assets recently has been the Nasdaq. In fact, this index has been in an up-only mode since December 2022. Looking at the chart, we can certainly go higher, with a focus on the daily FVG (floating volume gap). Additionally, a retracement for now would be more than normal. A region to look for a bounce is the daily order block, but there is a high chance that we will see a bounce if we remain bullish.

To conclude, the charts look much better compared to last week, and we can potentially look upward again. The majors in crypto are in a must-hold area to see higher prices, but time will tell what will ultimately happen.

Have a great day ahead!

Written by: Daan Foppen

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