Is crypto (ETH) the new AUDJPY?
There's a nice shape to the crypto moves of late, and Ethereum is one we’re seeing better flow with 82% of open positions held long. Traditionally retail derivative traders will have a skew towards countering a trend, especially one that’s been in play for 15 bars and has only really seen one down day in the time.
The set-up is clean – we broke the downtrend on 18 March, came back to test and confirm this as support and rallied into the March highs at 3035.
After a clean break, the BB's are widening as the distribution in price moves further from the mean - we’ve been hugging the upper Bollinger Band and finding support into the 5-day EMA.
I am not concerned with the move from a stretched perspective – the move is not extreme when I look at price premium (in %) vs the 5-day EMA or the $ distance between the 3-day EMA and 9-day EMA. We are now pushing the 10 Feb high and the 138.2% fibo extensions at 3316, so this may act as resistance, but a break would be huge.
The fact is with momentum plays is you get many false starts, which is typically why the win ratio is lower vs mean reversion strategies. When you get the move, you have to hold it, and right now the momo heads are wondering if this can become a true outlier…’a body in motion stays in motion' is the saying and for those who like to buy high and sell higher, the crypto scene is clearly on the radar and many are hoping it becomes the new NOKJPY or AUDJPY.
Those in the trade will be hoping this kicks on - screams of stay long until proven wrong are loud and clear...the exit is obviously key, but one thing is clear, dont trade your P&L - have a rules based approach when in trending positions
The set-up is clean – we broke the downtrend on 18 March, came back to test and confirm this as support and rallied into the March highs at 3035.
After a clean break, the BB's are widening as the distribution in price moves further from the mean - we’ve been hugging the upper Bollinger Band and finding support into the 5-day EMA.
I am not concerned with the move from a stretched perspective – the move is not extreme when I look at price premium (in %) vs the 5-day EMA or the $ distance between the 3-day EMA and 9-day EMA. We are now pushing the 10 Feb high and the 138.2% fibo extensions at 3316, so this may act as resistance, but a break would be huge.
The fact is with momentum plays is you get many false starts, which is typically why the win ratio is lower vs mean reversion strategies. When you get the move, you have to hold it, and right now the momo heads are wondering if this can become a true outlier…’a body in motion stays in motion' is the saying and for those who like to buy high and sell higher, the crypto scene is clearly on the radar and many are hoping it becomes the new NOKJPY or AUDJPY.
Those in the trade will be hoping this kicks on - screams of stay long until proven wrong are loud and clear...the exit is obviously key, but one thing is clear, dont trade your P&L - have a rules based approach when in trending positions
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.