Crypto is Ranging - Levels To Watch For The Coming Weeks
Updated
Everyone starts to go a little nuts after the market heats up. Traders act on impulse, trying to catch the big retrace or the next big move, only to realize that the market is beginning to range, and will not continue straight up. It appears many posts on TradingView right now are anticipating some sort of large move in the near future, but it's very possible they continue to get trapped and lose patience. The ascending triangle could play out---or the market could continue its healthy sideways movement. As traders become less and less confident, volume dries up and consolidation begins. This is the psychology behind the current price action––-I know firsthand. I was able to make some profitable trades on the way up, but have since realized that the market has entered chop city, as my remaining small long positions continued to get stopped out. I am not actively trading right now.
Even though many consider this to be a "no trade zone" some traders love ranges. Depending on how the rest of the week goes, I might start attempting some range trading, with a bias towards the long position, since the overall trend is still up. On my charts, I've clearly marked important levels for both Bitcoin and Ethereum (the two main market leaders). I do think it's possible both break towards those higher targets, but it could take up to 6 or more weeks for this to play out. During that time, price can dip briefly below the established range (Bitcoin down to $14.8-15.5k, and ETH down to $360-420). The market likes to shake out over-leveraged traders as well, but this commonly happens towards the beginning of consolidation, as impulse and FOMO are both rampant. Towards the end, it becomes much easier to note the established range and enter a position without getting stopped out our liquidated. At least, this is how the market has behaved for most of 2020. This would be my ideal strategy during this period. The longer it consolidates, the more confidently I can enter a new long position as well. Since the market has entered a parabolic stage, this consolidation may be quicker, and sideways may not occur for too long. It could break out today, for all I know. But taking a look at these channels for TOTAL and TOTAL2, it seems fairly realistic to expect at least another week or two of ranging. I have a couple scenarios drawn here:
Usually, the 100 day MA is the best place to buy during a bull market. Look at this analysis for reference (it played out perfectly):
Everyone is also waiting for the big 30-40% Bitcoin correction. It will probably come, but perhaps not until higher levels. As noted above, range lows may be tested before another impulse up. The market is clearly in a bullish trend, but things will begin to look worrying if Bitcoin breaks below 12k and stays there. Likewise, if Ethereum fails to hold above $360, or even $400, I will become more concerned about ETH. Based on institutional interest, it seems reasonable to expect a shallower correction, but perhaps it takes a while for momentum to pick up again. Prices aren't likely ready to appreciate/depreciate substantially until the ranges are broken (Bitcoin needs to break and hold above 19.4k and ETH the same with $620).
There are some other things I'm watching, like LTC and XRP, as those altcoins have done very well on their as Bitcoin touches all-time-high prices in the past. I was able to catch a couple of decent long trades on those recently, until they hit resistance and started ranging. Of course, they may not repeat this cycle, but their price behavior should tell me something about the long term trend of Bitcoin dominance, as well as retail behavior towards altcoins. I will write more about this in another post, but here's Bitcoin dominance, at an important decision level, holding an important uptrend (orange). The light blue lines and the red are all long term downtrends:
This is not financial advice! This is meant for speculation, education, and entertainment only.
-Victor Cobra
Even though many consider this to be a "no trade zone" some traders love ranges. Depending on how the rest of the week goes, I might start attempting some range trading, with a bias towards the long position, since the overall trend is still up. On my charts, I've clearly marked important levels for both Bitcoin and Ethereum (the two main market leaders). I do think it's possible both break towards those higher targets, but it could take up to 6 or more weeks for this to play out. During that time, price can dip briefly below the established range (Bitcoin down to $14.8-15.5k, and ETH down to $360-420). The market likes to shake out over-leveraged traders as well, but this commonly happens towards the beginning of consolidation, as impulse and FOMO are both rampant. Towards the end, it becomes much easier to note the established range and enter a position without getting stopped out our liquidated. At least, this is how the market has behaved for most of 2020. This would be my ideal strategy during this period. The longer it consolidates, the more confidently I can enter a new long position as well. Since the market has entered a parabolic stage, this consolidation may be quicker, and sideways may not occur for too long. It could break out today, for all I know. But taking a look at these channels for TOTAL and TOTAL2, it seems fairly realistic to expect at least another week or two of ranging. I have a couple scenarios drawn here:
Usually, the 100 day MA is the best place to buy during a bull market. Look at this analysis for reference (it played out perfectly):
Everyone is also waiting for the big 30-40% Bitcoin correction. It will probably come, but perhaps not until higher levels. As noted above, range lows may be tested before another impulse up. The market is clearly in a bullish trend, but things will begin to look worrying if Bitcoin breaks below 12k and stays there. Likewise, if Ethereum fails to hold above $360, or even $400, I will become more concerned about ETH. Based on institutional interest, it seems reasonable to expect a shallower correction, but perhaps it takes a while for momentum to pick up again. Prices aren't likely ready to appreciate/depreciate substantially until the ranges are broken (Bitcoin needs to break and hold above 19.4k and ETH the same with $620).
There are some other things I'm watching, like LTC and XRP, as those altcoins have done very well on their as Bitcoin touches all-time-high prices in the past. I was able to catch a couple of decent long trades on those recently, until they hit resistance and started ranging. Of course, they may not repeat this cycle, but their price behavior should tell me something about the long term trend of Bitcoin dominance, as well as retail behavior towards altcoins. I will write more about this in another post, but here's Bitcoin dominance, at an important decision level, holding an important uptrend (orange). The light blue lines and the red are all long term downtrends:
This is not financial advice! This is meant for speculation, education, and entertainment only.
-Victor Cobra
Note
looks like there is already an attempt here to break the range. Alts are also not underperforming (I would hope not, with Bitcoin this close to ATH). Could take a little more time. The market might also reject higher prices, but the media can do a good job of inciting FOMO. Let's see if this consolidation period ends here. If that happens, I might still wait for more trades. Happily holding my spot positions. Note
Well, failure to break the range yet again. Not surprised at all. Now we’ll have to see if the market wants to test the lower bounds of the range, or if it makes a higher low.Note
Bitcoin managed to make a higher low, and is holding above 19400, which is a pretty good sign it wants to break the range. The next target would be in the mid-20k area, or even near 30k. But there can still be a fake move first, so I'd watch closely!Note
Bitcoin has officially started moving up! As long as it holds above 19k, I think it can continue at least to the first target area on my chart. Alts, including ETH, have yet to break their ranges. They should start to break out if Bitcoin can hold above 20k. They might need to wait until Bitcoin reaches its next short term peak.Note
Looks like the first target area is about reached. Close to 24k already. Pretty amazing how short this consolidation range lasted. I do still think there's a fair chance for sub-20k prices again, but 30k might be tested first. We're officially in uncharted territory!Note
Since this analysis, BTC has broken the range, but ETH has rolled back over to test what is *technically* the upper portion of the range. So far it has held as support, so I did enter an ETH long today at $613.50, with a stop loss at $575. XRP is also still ranging between $0.44 and $0.66. I also entered a small long at $0.52, which is somewhat in the middle of the range.
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