• Henk ter Linde

The Week After

Hello again. On time this time. Sorry for the irregular postings over the last few weeks but I promise to do better. It is a pity we cannot add a poll here, because it would be very interesting to know how you all experienced the halving. Did it bring what you expected? What did you expect? Was it all a hype? Is the real effect still to come? Will there be cake?

All I can provide is my personal view. I half (pun intended) expected a big 'sell the news' event around the time of the halving. And I do mean big. Like a drop of at least 1500 USDT. However, I may have been overly bearish lately. I also expected legacy markets to do much worse and look what is happening there... I mean: does the real economy even matter anymore? As I was expecting crypto to follow legacy, I can only say that still seems to be correlated. Which does not mean they mimic each other. One of my colleagues here, wrote an excellent article on that, which I highly recommend you give a read: https://www.blog.btse.com/post/btc-sp500-decouple

That being said, I am still not overly optimistic that we will soon leave the range we are definitely in for greener pastures. 10K seems an insurmountable hill we are having a hard time climbing. I normally use longer timeframes to gauge the market, so I suggest we start with the weekly.

I try to keep it simple. I used the linear view because, in my mind, it provides a clearer picture. It is not set in stone and I will use both linear and log. They both more or less tell a similar story. The blue line is the top of what I expect to be a symmetrical triangle (best seen in log), the two red lines indicate two major S/R levels, one of which we are currently testing / being rejected by, depending on your view. The red and blue are the 9 and 52 EMAs respectively and the green line is the oh-so-important 200 MA. (See chart at the end to illustrate that) Personally I am not too driven by RSI divergence, but I do like to see if the RSI has more room to the upside or the downside. What I care more about is the Stochastic though. Not the Stochastic RSI, but the plain stochastic. Especially on longer timeframes. Now if only it was so simple as to say 'Stoch > 80, gotta sell matey' (I am sorry for that one), but it is not too far off. Agreed, in a crypto-gone-wild bull run, the Stoch can stay up there for donkey's years, but generally it is a time to pay attention, especially if the lines cross.

I see two possible routes over the next few weeks. Either we get a hefty correction to the downside and everything resets (again), or we manage to break above 10.5K, smash the blue resistance line and don't look back for a while. My preference is that we test the 200 MA support one more time, simply because we always retest that at least once.

Looking at the daily, I clearly see us being rangebound for a while. There have been some half-hearted escape attempts to both sides, and of course the actual range is enormous. Trader's wet dream. However, it also seems very controlled to me. But maybe I am biased.

Sometimes I like to put the pivots on the chart to see if we are bouncing between pivots. It clearly seems that the current daily pivot and the R1 are dominant on the chart. The red box indicate the major resistance zone (dating from September last year) and the green zone is basically in the middle of the wider trading range (between R1 and S1) and could potentially act as strong enough support to narrow the TR for now. Lets zoom in a little bit more, shall we?

On the 4hr you could say that we just had a SFP, but it could also be a double top (which it isn't until it plays out as one). What it is not, is a cup & handle, as the handle is a bit too deep for that. Also, with the Stoch crossing bearish at the same time of the possible SFP, I am inclined to say we will get a slightly deeper correction, at least to the 9300 level.

The entire macro-economic situation is unclear as of yet. If you can pardon the somewhat morbid analogy: whether the dip to 3800 was the end of wave 2 (on a high level count) depends very much if there will be a 'wave 2' for Covid-19. If there is another wave, I suspect the markets will suffer deeply and I don't expect crypto to be an exception. If we get spared another wave, 38xx was probably a golden opportunity to buy BTC. That said, I do not expect BTC to rise to astronomic levels just yet. For that it will need real world use-cases.

As always: trade safe, be safe and have fun!

PS: Added a chart to illustrate the 'importance' of the 200 EMA on the weekly.

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