Retail getting manipulated again?

Finally, some price movement in the cryptocurrency market. Prices went down, and we saw a classic sentiment switch, even though it wasn't really necessary. As I have discussed in previous trade letters, BTC is clearly in an uptrend, and we can drop quite a bit and still make a higher low. After dropping out of the range, we noticed that everyone thought we would go much lower again. As usual, many people have missed the recent move on BTC. In this trade letter, I will explain what is being done to manipulate retail traders and the levels we need to watch for further upward movement in the cryptocurrency market.


1-week timeframe

In trade letter 165, I described that this is one of the crucial things that need to happen for further upward price movement. It's important that imbalances in the chart get filled again, although not necessarily completely. Only through this move in the weekly imbalance, in my opinion, can we look up again to remove external liquidity.

Read trade letter 165 for further explanation:

Bitcoin is manipulating retail

On Monday, July 24th, we saw a drop in price. After the drop, we observed a slow grind upwards without much conviction. It was a slow grind to create liquidity at the lower end. Often, there is another run towards the low that occurred after the initial drop. We saw this happen yesterday when there was a move downward towards the low of 28.8K. After this happened, there was a significant increase in open interest. These were people who took short positions, anticipating lower prices. What followed was a classic short squeeze, which caused late shorters to be forced out of their positions.

These are the crucial levels for BTC

We have discussed this range many times, and the deviation we have below the range is currently creating an interesting situation. Due to the short squeeze from yesterday evening, we saw the price attempt to get back into the range. It temporarily succeeded, but at the time of writing, we can see that the price has fallen outside the range again.

This leads me to mainly consider two scenarios. The first is a clear reclaim of the range. For this, you would want to see a gain above the level of 29.5K. If we continue to drop, the 4-hour FVG around 29.2K becomes a crucial level to watch as potential support. If it fails to hold, there is a high chance that we will make new lows.

ETH is lagging behind again

This remains a recurring phenomenon in the cryptocurrency market in 2023, with BTC continuing to be much stronger than ETH. When we compare the charts, we can once again see that BTC has made a new high, while Ethereum has not been able to achieve this. This indicates weakness for Ethereum compared to Bitcoin since the price action of these two assets is often highly correlated.

If you are still interested in longing Ethereum, I would personally look at the 4-hour FVG at $1846. A bounce from this area could lead us to the highs around $1888 to take liquidity from there.


Finally, there have been some developments in the price action that allow us to create a plan for the next steps. However, I would like to emphasize that it's probably better to focus on Bitcoin rather than altcoins. Bitcoin remains the leader in every run that occurs, and that is still the case now.

Until the next trade letter!

Written by: Daan Foppen

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