FSR- a risky penny stock long trade in the EV space LONGFSR has been mentioned as a bankruptcy candidate. It has been on a super trend down on
reports that it does not have enough cash reserves to meet operating expenses and production
quotas. However, any review of the chart in the past quarter shows that it is capable of
counter trends where it suddenly gains 10 to 20% in market cap in a short period only to give
it back in the aftermath. It is these countertrends that I have traded recently including
late February and the earliest days of March. At present, FSR price is low in the recent
high volume area of the profile and the Trend Strength Index is shows some volatility.
The LuxAlgo predictive regression forecast is for higher price action in the near term.
I will take a long trade here targeting first the trendline resistance of the falling wedge pattern
and then the mean VWAP line if the breakout occurs. The trade is expectant for a 20-25%
return in a few days consistent with a prior breakout. I will set a stop loss below the support
trendline at 0.116 to decrease the risk while raising the stop loss upon reaching the upper
trendline to 0.13. Call options for 4/19 will be entertained striking 0.50/
Anchoredvwaps
GE has a solid ongoing trend higher LONGGE on a 240 minute chart shows an anchored VWAP and volume profile both anchored back into
October and a price action breakout beginning after the November earnings report and
sustained through the early February earnings report. Both reports showed significant beats
on earnings as well as good beats on revenue. I see GE as a solid long term long swing trade
into at least the next earnings in about ten weeks. Another approach aside investing is
a long term call option more than one year out to capture the tax advantage of the long- term
capital gains tax rate. I will zoom into a 30 minute time frame and go long with the best
entry of a pivot low.
Can WIMI an IT penny stock hold above a dollar per share ?WIMI rocketed from 60 cents to $1.50 two days ago and then fell to 93 cents near to the
Fib 0.62 retracement which is greater than the typical. The idea is on the chart. So the analysis
is a symmetrical triangle pattern with a high normal retracement now at the apex of the
triangle with quick compression on the 15 minute chart. Volume is now. Friday afternoon
had a pullback likely to rake profit for the weaken. Money flow and relative strength are
decent but settled down. So will this penny awke up next week and try to move toward
its high of the week or will it fall lacking attention from distraction by technology stock
earnings reports and a crypto-sruge. To be sure, this is not an earnings play. There was
a highly significant news catalyst early in the week. This news is a possilbe game changer.
Over the intermediate term, despite any analysts' forecasts this could do 10X by summer.
As to next week, who knows but with an overshoot on the retracement and now below the
the mean VWAP band anchored to the beginning of the week. I am voting for a reversion to
the mean which just happens to be 1.00 ( a convenient "psychological level.).
As to a trade setup, a will take a big lot of shares from a buy stop set for 1.01 with a stop loss
of 0.97 and see if I get filled.No matter, this will be a swing trade for me. I will do adds at
the low of the week each week for several. I understand the news catalyst and believe
this penny IT will get a begin growth spurt in little time at all.
TSLA Weekly Longterm LONGTSLA is here on the weekly chart. I have added a couple of anchored VWAPs and their
standard deviations to the chart itself. The two indicators are the zerio-lag MACD which
shows upgoing lines crossing the zero horizontal line and a positive histogram. The Price Volume
Trend indicator shows a cross and consistent upgoing action since February 1, 2023. The chart
itself shows price to have crossed over the two mean VWAPs 4 weeks ago which is confirm-
atory for bullish momentum. TSLA pivoted up from the second deviation below the mean
VWAPs about February 1st. My target is $360 the present level of the second deviation lines
(red) above the mean VWAP confluent with the horizontal resistance zone of the highs
from November 2022 January 2023 and April 2023 all a triple top of sorts. I am highly
bullish on TSLA overall given its progress in autonomous driving, charging station
station infrastructure, deal making with F GM and RIVN insofar as charging standards
and cooperative ventures as well as obvious signs of growth with Cybertruck production,
and new plants in Mexico and potentially Spain and India. I have purchased ten options
striking $350 with a December 2023 expiration. I have call options expiring in August
and September. I expect to roll them out for more than a year to minimize the tax treatment
of expected significant profits.
SPY Continues Trapping Bulls / Bears; Rally Traps Bears NextPrimary Chart: S&P 500 represented by AMEX:SPY (SPDR S&P 500 ETF trust, an ETF traded on ARCA and NYSE)
SUMMARY
US equity markets may continue to trap bears and bulls alike in the coming weeks and months on the short-term to intermediate-term timeframes.
SPY / SPX may rally in the coming days and weeks into April 2023. Such a rally makes sense from a technical viewpoint but would be considered irrational given the broader macro environment. But consider how many irrational and unexpected price swings have occurred since this bear-market began in early 2022.
The price range in SPY has been compressing over time since the October 2022 lows. The anchored VWAPs (discussed in detail below) confirm this compression and tightening of the range.
Price is finding support at the 3900 SPX / 390 SPY level. If this does not hold as support (or if it breaks and does not quickly reclaim), the entire thesis of a rally is invalidated.
Conservative targets begin at $398-$399 ($4000 SPX). The list of targets appear below:
1. 398.48 SPY / 4000 SPX (most conservative)
2. 401.14 SPY (conservative)
3. 404.42 SPY (conservative)
4. 407.70 SPY (moderately aggressive)
5. 409.25 SPY (moderately aggressive)
It is easy to come up with bearish stories about how price will run in a straight line to new lows. Perhaps that may happen this spring. But perhaps not. The crash-right-now scenario seems far too easy and predictable without sufficient pain (max pain theory) for bears and bulls alike.
Instead, price may continue to chop within its ever-tightening range. A few more traps and tricks may lie ahead before a major trend move can occur. The following SPY charts show a reasonable argument and analysis for higher SPY prices the coming few weeks. Keep in mind, this is a shorter-term view only lasting only 2-10 weeks. Whether all-time highs will be reached before new bear market lows are achieved seems unlikely, but markets can do whatever they want. It's helped me to realize that anything is always possible in markets no matter how irrational. And it doesn't make sense to spend a lot of time thinking about which will happen first: new all-time highs or new bear-market lows. Why? Because it doesn't matter and it probably can't be known with even the best Elliott-wave counts or the most extensive macro deep dives.
Turning to what the charts are showing us currently, one can see that US equity markets continue to trap bulls and bears in difficult whipsaws that defeat longer-term positioning in both directions. Bulls were trapped in late January 2023 and early February 2023 when SPY rallied convincingly above 410 (4100 SPX) to reach nearly 420 (4200 SPX). Many said that the lows were final and that the market was traveling back to new all-time highs. The macro and monetary-policy environment has suggested caution as to forming optimistic, inflexible bullish biases about reaching new all-time highs with a new uptrend. In any event, few strategies have worked in this price environment. One famous trader discussed in Jack Schwager's Market Wizards series said recently he was down somewhat this year on the few positions he has taken, and that this market has been extremely difficult. In general, from his public statements, one can glean this particular "market wizard" has been staying largely away from investing and trading (a trading decision in itself which requires great discipline) given that his breakout-trading strategy does not work in this type of market.
Given the whipsaw and chop on a daily and weekly basis, shorter-term strategies between major levels may have the most success. As one veteran trader once said, trading from the edge in chop will give you an edge. The edge has been difficult to define, however. For example, in early February 2023, SPY / SPX pushed deviously above December 2022 highs. The December 2022 highs appeared to be the chop-range's edge. But price pushed above that in a tricky way that trapped many bulls. Bears have had their share of pain too, as price has broken below key levels only to reverse higher. For instance, in December 2022, after the FOMC presser that killed the rally, price fell into the 375-385 SPY range only to fail to follow through to the downside as many market players may have expected. Similar shorter-time frame failed breakdowns have also appeared on January 19, February 9-10 and February 22, 2023.
The anchored VWAPs confirm what might be inferred from the choppy price action alone. Supplementary Chart A below shows several key VWAPs anchored to major turning points since the all-time high in SPY / SPX on January 4, 2022. Notice how they show price compression as VWAPs from major highs drift downward and VWAPs from major lows drift upward with price caught in the middle except for the trappy breals above and below that failed.
Supplementary Chart A.1
In a way, the VWAP from the October 2022 low and the VWAP from the January 2022 high have together formed the boundary for price action since the October 2022 lows. The next chart, Supplementary Chart A.2, shows just these two anchored VWAPs to allow a better visualization of this phenomenon (compression):
Supplementary Chart A.2
Next, consider the Fibonacci levels shown on Supplementary Chart C below. This shows where price could rally in the coming days and weeks. The shorter-term Fibonacci retracements were drawn from the intraday low on Friday, March 9, 2023, which may not be the low of this particular swing. If this low changes, SquishTrade may likely provide an update on this.
Supplementary Chart B
Considering Supplementary Chart B further, the most reasonable targets are also the closest resistance areas under Fibonacci analysis. The most obvious target is the $398.48 Fibonacci level, which is the .382 retracement of the entire bear market decline (retracements drawn from the all-time high in January 2022 to the current bear-market low in October 2022). This level is approximately 4000 on SPX, a key psychological level and an important positioning level. None of the upside shown on any of SquishTrade's charts can occur without a decisive recovery above this area.
Assuming the 390 SPY area holds as support next week, the key Fibonacci areas to watch as targets and resistance are the 50% and 61.8% retracements of the recent swing high to low (starting at February 2, 2023). This gives us conservative targets for a rally of $401.14, $404.42, and $407.70. If a lower low is made in the next few days on this decline, then these Fibonacci retracements will be revised somewhat lower.
The next target is the VWAP from the all-time high at $409.25 today. This shows a gentle decline over time, so in the coming days it may be marginally lower or higher depending on price direction. Reclaiming this anchored VWAP would require a substantial move in the face of hostile macro and rate environment.
So SquishTrade will refrain from extensive discussion of targets above this January 2022 VWAP at 409.25 (4100 SPX) and mention them merely as possibilities to watch. In other words, these targets remain inchoate and tenuous until lower levels reclaim first. In any case, the Fibonacci analysis on Supplementary Chart B above reveals confluence around the August 2022 peaks. This shows $429.61 SPY as a major Fibonacci level, i.e., the .618 retracement of the entire bear market high to low range. This coincides with the August 2022 peaks at $431 as well as the 1.272 external retracement (or extension) at $425.87.
SquishTrade's analysis does not assert definitively that this $425-$431 area will be reached as that would be premature. No confidence on a technical basis can exist as to whether can zone will be reached until price can reclaim critical lower levels first. But it seems plausible technically speaking (and setting aside macro biases for purposes of this analysis). That would cause a great deal of market pain and suck in a lot of investors and bulls into the chase of a new bull / primary uptrend. For now, this post's analysis is limited to a call for SPY to move higher into the more conservative targets discussed above ($398, $401, 404, 407, $409). Again, these lower price levels must be reclaimed first before considering any SPY / SPX targets above $410 SPY / 4100 SPX. And this author prefers to take price action a bit more granularly, i.e., level by level, to avoid forming rigid biases that work against one's ability to read price action objectively, and to resist getting too far ahead the present action and the charts as they appear here and now, which provide valuable information daily that is better than any forecaster on Wall Street can provide.
Lastly, consider the final two supplementary charts below showing (1) gap fill areas just above $420 (SPX 4200) and (2) the measured-move from October 13, 2022. This could result in a move to $437.02. This would seem outrageous and irrational given the macro environment, right? But how many times this year have equities acted outrageous and irrational? Perhaps even this technical area can be reached before the great slide begins in earnest. Flows from positioning (CTAs) and options can be affected by a number of things that don't involve the terminal rate or inflation prints. In any event, look at how price is finding support at the $389-$391 area (shown by a blue rectangle on the Primary Chart and the supplementary charts. As long as this holds, price can move higher into April 2023.
Supplementary Chart C
Supplementary Chart D
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
SPX Downtrend Intact But Short-Term Relief Rally LikelyPrimary Chart: Primary Down Trendline, Fibonacci Levels, Two Key Anchored VWAPs
SUMMARY
SPX's downtrend in 2022 was never invalidated. It remains effective at the start of 2023. Downward forward earnings revisions combined with a challenging macro environment (recession along with tight central bank policies in the US, UK and EU and elsewhere) will continue to pressure prices lower in the intermediate term and perhaps even the longer term until central banks begin to pivot away from restrictive policies. Falling money supply (the result of central bank policies) should also continue to be a headwind.
Although the downtrend remains intact and likely to continue, a relief bounce looks likely in the short term. The Bollinger Bands (%B) provides a short-term positive signal. And price action closed with strength on Friday, December 30, 2022. One caveat is that many strong closes in this downtrend have been followed by sudden and unexpected downdrafts. Caution is warranted.
The first target is 3864-3870 SPX. The second target, which will only be valid and effective if the first target is captured and held on a close, is $3887-3893 (3900). The third target is 3916-3932. The final target is 3972, where a gap fill area coincides with the .618 retracement of the decline from mid-December 2022 peaks.
AAPL's reclaiming of a key level, after an extremely bearish final quarter of the year, supports a short-term relief bounce.
The S&P 500 SP:SPX saw a sustained downtrend in 2022, which started on January 4, 2022 and continued into year end. This downtrend remains in effect and intact going into 2023. The macro environment continues to be problematic, though inflation does appear to have peaked at least in the US. Regardless of whether inflation has peaked, the most important question remains whether inflation will continue its decline to the Federal Reserve's 2% target or whether sticky components will interfere.
Meanwhile, corporate earnings appear to be falling whilst central banks (especially in the US and EU) remain committed to keeping monetary policy tight. In mid-December 2022, recall that Christine Lagarde, ECB President, said definitively that the ECB is not pivoting, not backing down in maintaining its tighter policy. Many more hikes lay in store, especially given that the ECB remains behind the US to some extent. The US is already at a Fed Funds target rate of 4.25% to 4.50% while the ECB's target rate remains around 2%.
Continued tight policy in the US and abroad should likely cause forward earnings to continue to decline. The focus may likely shift from inflation toward growth / recessionary concerns. Inflation will still be a major issue, however, and sticky inflationary components may support central banks remaining tight for longer than expected, which in turn will influence growth / recessionary concerns. So downward earnings revisions / recession may be the catalyst for equity markets to see further downside in 2023. Interest rates remaining higher for longer may be the reason for a lower SPX multiple. Some financial experts have stated that markets tend to bottom when SPX's PE is around a 13-15 multiple. SPX is currently around 17-18x SPX forward earnings of about $230 (approximate figures used given that SquishTrade does not focus on fundamentals but technicals).
In the very short term, however, markets appear primed for a countertrend bounce. Markets spent the final trading days of the year chopping around the 3800 SPX level, where a massive JPMorgan hedging position (an options collar) had a short call strike just above this level (3835) with about 45,000 contracts on SPX (each with a multiplier of 100). That collar's expiry was December 30, 2022. So it has now expired and should no longer pin markets around this level, though a new one has been or will soon be established via a roll or outright (this is a quarterly phenomenon). Key price movements on December 30, 2022, as well as other technical evidence, supports a countertrend bounce.
But substantial resistance lies overhead. VWAPs, Fibonacci levels, and overhead supply zones all will make it more difficult for price to rise in an unfettered manner into the new year. However, a series of potential targets will be identified below. Each subsequent target, as usual, depends on the prior target being captured and held on a close. Furthermore, the reasoning for why a bounce may be imminent will be discussed through charts and technical analysis below.
Note that just because a bounce may occur does not mean it is time to load the boat long: countertrend bounces can fail at any time, being swept away by the larger degree tide of a primary downtrend. Such bounces require traders who participate to be nimble and flexible, and they only work when traders manage risk extremely well. The alternative for traders is to stand aside and wait until the short-term trend re-aligns with the longer-term trend. SquishTrade has found that standing aside often works better than trying to trade every countertrend move followed by trades where trends on all time frames align. Traders may find that it helps to free up both mental and financial capital to prepare for the bigger, better moves where trends align on multiple time frames.
The supplementary charts and analyses below support the main technical viewpoints discussed.
1. The primary downtrend remains intact and is likely to continue. It can resume at any time, and it seems likely that it will lead to new lows in 2023. But it's better to take price action level to level rather than blindly assuming new lows are destined to occur.
Supplementary Chart A
2. A short-term relief bounce appears likely, however, that may give shorts an opportunity to establish bearish positions in anticipation that the decline will resume.
Consider the W bottom appearing on the Bollinger Bands, as evidenced by the %B indicator, which reflects this pattern well.
Supplementary Chart B.1
Consider the way price closed on December 30, 2022, the final trading day of 2022. Price fell dramatically from December 12-13, 2022, after the FOMC meeting that week. But price stopped falling right around the 50% Fibonacci retracement level (shown below) near 3800 (3796), which is the 50% retracement of the entire rally from the mid-October 2022 lows to the mid-December 2022 peaks. Then, after chopping in a range for nearly two weeks (9 trading sessions), SPX pushed back above it's short-term VWAP in the final minutes of trading on December 30, 2022 and back above a key short-term EMA. Of course, this could all change on January 3, 2022, and the chop could continue the way it has for the past two weeks. But daily and weekly closes can be important.
Supplementary Chart B.2
3. AAPL's price action, while bearish, suggests a *short-term* relief bounce as well. AAPL, the most heavily weighted stock in the SPX and the NDX, saw very bearish price action in December 2022. It not only undercut prior lows from October and November 2022, it also finally undercut its June 2022 low at $129.04. And it made new lows around $125.87. Consider the yellow circle for a moment—notice how AAPL undercut its 2020 Covid-low VWAP (pink) as well as the June 2022 low support area only to reclaim this key zone the next two days. This recapture of a key level, this failed breakdown, suggests at least some limited further upside. Watch out for the major resistance areas above, however! And the new lows on daily and weekly charts (under June lows) do not suggest AAPL is about to resume a new uptrend back to all-time highs. Rather, they suggest further downside ahead.
Supplementary Chart C
4. A variety of anchored VWAPs from major swing highs and lows from 2022 suggest that the downtrend remains intact into 2023 but that a relief bounce could occur in the coming weeks. Notice how the VWAPs all lie overhead in a bearish position. But the slope for the June, August, October and December VWAPs has moderated a bit, flattening out and suggesting that price may rise to test them soon. Even if price breaks above them temporarily, watch for a breakout above them that ultimately fails.
Supplementary Chart D
5. A series of plausible price targets for a relief bounce is presented. Remember that SquishTrade presents targets as conditions precedent to each other. So Target 2 will not be viable or valid unless and until Target 1 is captured and held on at least an hourly (preferably daily) close.
Supplementary Chart E
Thanks for reading. Happy New Year!
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Resistance Levels Where AMD Could Fail in a Bear RallyPrimary Chart: Bollinger Bands (Yellow Shaded Volatility Channel) with Fibonacci Levels, Downward TL and VWAPs
1. As discussed earlier this month, AMD remains in a severe downtrend at the primary degree of trend. This means that the path of least resistance on higher time frames remains lower unless and until AMD can do a substantial amount of price work and recover into the mid $80s (the area of the downward trendline shown on the Primary Chart) and preferably the $100.60 level (the .50 retracement of the 2020-2022 rally).
Supplementary Chart A: AMD's Linear Regression Channel Reflects Severe Downtrend
2. In every trend, however, corrective retracements and mean reversions will occur. In a downtrend, market participants commonly attempt to pick bottoms especially in former market leaders and darlings—and when this bottom-picking is combined with heavy short positioning that requires covering when major downside moves exhaust, ferocious bear rallies ensue. On October 11, 2022, SquishTrade prepared the following chart showing some of the powerful bear rallies that have occurred since November 30, 2022 (all-time high date):
Supplementary Chart B: Percentage Gains for Bear Rallies in AMD Since All-Time High
3. The VWAP anchored to the all-time high on November 30, 2022, shown on the Primary Chart, reveals that the downtrend at the primary degree of trend remains in effect. The lower highs and lower lows on daily and weekly charts support this conclusion, and the downward trendline—also shown on the Primary Chart in orange—has not been broken. Price remains significantly below both the orange downward TL and the all-time-high VWAP, showing the profound weakness in this former market leader.
4. Price has even fallen beneath the April 2018 anchored VWAP (shown in red on the Primary Chart above) having a price value of $61.95 on October 20, 2022. AMD's rapid decline since August 4, 2022 peaks appears to have stalled just after breaking below this VWAP. This 4.5 year VWAP provides strong near-term resistance at $61.95. This level of interest should be monitored during any bear rally and on any subsequent decline. Price may rally and whipsaw above it during a mean reversion only to fail and slice back below it.
5. Price has fallen beneath the .786 and .618 retracements of the entire rally from the Covid 2020 lows. These levels are at $64.08 and $85.54 respectively. This is significant because it reflects the strength of this downtrend. Any bear rally will meet strong resistance when rising back to these levels. Before considering these levels as resistance however, price must first break above the April 2018 VWAP (about $61-$62), and the 21-day EMA at about $63.31 as of October 20, 2022. Until the 21-day EMA and the April 2018 VWAP are reclaimed ($61-$63 approximately, the higher retracement levels remain irrelevant.
6. Some evidence of downside exhaustion appears on AMD's charts. These suggest that a short-covering and FOMO-driven rally may occur in the coming weeks between now and year end. SquishTrade hinted at this possibility recently with the following chart, showing how AMD was approaching the bottom of its downtrend channel:
Supplementary Chart C: October 11, 2022, Post Showing Higher Risk For Shorts Near Downtrend-Channel Support
7. On AMD's daily chart, RSI now shows a positive divergence despite price making lower lows. This is further evidence that shorts should be cautious and wary of a bear rally or, at a minimum, choppy action over the next few weeks.
Supplementary Chart D: RSI Positive Divergence on Daily Chart
8. The Bollinger Bands also suggest that the downward price move from August 4, 2022, swing highs may be nearing exhaustion. Note how the bands (set at two standard deviations) are contracting now, which suggests either chop or mean reversion in the coming days or weeks. The %B indicator in the subgraph also shows weakening downside price action. As price made lower lows over the past two months, the %B indicator made higher lows. This reflects that price moves were less powerful even though they made lower lows on the main price chart—when price cannot pierce the bands as deeply with each subsequent low, and when price eventually cannot even tag the band with a new low in October 2022, this shows price may be ready to consolidate or mean revert.
Supplementary Chart E: Bollinger Bands Signaling Exhaustion and Temporary Pause in Downtrend
9. For anyone trying to catch the bear rallies, watch out for false breakouts above resistance as discussed in the following linked post, showing a false breakout this month above a shorter-term trendline. When the primary trend is down, countertrend moves can be challenging and tricky, so tight stops make sense.
Supplementary Chart F: False Breakout above Resistance—Example from October 6, 2022
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
BTC: Bounces Face Formidable ResistancePrimary Chart: Daily Logarithmic Chart Showing Anchored VWAPs, 34-Day EMA, Trendline
Previously, SquishTrade discussed why BTC's downtrend cannot reverse given that sellers remain in control as defined by the volume-weighted average price starting at the all-time high. That discussion is contained in the post linked below.
Supplementary Chart A
Some may respond that any downtrend cannot reverse if sellers remain in control, so why state the obvious? Trends end via a process. A downtrend requires a bottoming process and an uptrend requires a topping process. So for a downtrend to reverse, it remains important to see buyers starting to take control on different time frames. For example, in a downtrend, buyers may often take control temporarily on smaller degrees of trend during a bear rally—such as the bear rally in BTC from June to mid-August 2022—only to realize that sellers remain firmly in control on a larger degree of trend (such as the primary trend). When sellers remain in control on larger degrees of trend, then buyers will inevitably lose control eventually on the lesser time frames when bear rallies end.
The Primary Chart shows how BTC's price remains well under the VWAP representing the primary trend (red) anchored to the all-time high, as well as the down trendline covering the same period. But other VWAPs are also looming overhead and sloping downward including the VWAPs anchored to the March 28 swing high (gold), the June 18 low (black), and the September 21 low (green).
BTC has chopped within a tight trading range since mid-September 2022. This appears to be consolidation, a typical occurrence after powerful and sharp trend moves. Markets and instruments that have trended strongly in a given direction need time to digest that move. Chop occurs, trapping both sides of the market, frustrating bears and bulls alike with persistent moves in both directions that quickly fail and reverse. Over the summer since the June 2022 lows, BTC has chopped and consolidated as shown in the chart below dated from early October 2022. Notice the abundance of failed breakouts and breakdowns around that key $19,246 level.
Supplementary Chart B
Note that this choppy consolidation range has continued despite equity indices falling precipitously in September and October 2022 to new YTD lows. After tracking (or correlating) to some extent with major equity indices like the Nasdaq 100 this year, BTC's price has remained relatively sideways while indices have continued to fall into mid-October. Now that equity indices are rallying, BTC still remains stuck in the same range, though this could change at any time. Below is a chart of BTC's trading range as of October 21, 2022—notice how BTC has chopped very tightly for around the .786 retracement of its summer rally. This chop has lasted since mid-September 2022.
Supplementary Chart C
Taking a somewhat broader perspective, the chop has lasted since June 18, 2022, lows. The Primary Chart shows the major five-month support and resistance levels as blue rectangles. Price has been unable to leave this zone since the YTD lows. The downtrend line on a logarithmic chart has held as resistance since the all-time high November 10, 2021. Even the shorter-term downward trendline from May 2022 has been unbroken as resistance. On larger time frames, therefore, the picture remains quite negative for BTC. And even on lesser time frames, BTC's price has remained relatively week, unable to stay above the VWAPs from the June and September 2022 lows.
One need not look only at the technical evidence from BTC's chart to find obstacles to a major trend reversal in the near future. Additional hurdles stand in the way of BTC reversing its trend in the near future (though bear rallies are not precluded), which include the following:
1. A meteoric rise in interest rates this year that is unlikely to stop pressuring risk assets any time soon. SquishTrade will reference the 10-year yield from the US as a reference for rates in general, but many interest rate charts in other countries look similar. The sharp upward trendline in rates (TNX charts below) from early August 2022 to present date explains in part the selling pressure seen broadly in equity indices around the world. This upward trendline has not been broken to the downside yet.
Supplementary Chart D.1
Even if interest rates need time to consolidate and pullback to digest this massive move, the larger term picture suggests the trend may be upward for the longer term. Consider the chart below, published with apologies for the unpleasant appearance and implications. It shows a very long-term breakout in yields above a 40-year downtrend. This appears significant. Though a retest of the trendline could occur, the longer-term implications are that rates will be higher for longer, a refrain repeated by the central bank in the US and elsewhere in recent months.
Supplementary Chart D.2
The next chart shows that a corrective pullback in yields could occur in the near term based on momentum divergences and relative weakening despite higher highs in the rate. The %B indicator shows that price is piercing the upper band (set at two standard deviations from the mean) less deeply, showing that higher highs in price are actually relatively weaker and lower highs from a standard-deviation viewpoint.
Supplementary Chart D.3
Finally, given the strength in momentum on a monthly basis, yields are very likely to continue to remain strong in the coming months even if a corrective pullback occurs. Momentum hit a 40-year high on RSI (monthly chart below):
Supplementary Chart D.4
2. Inversion of the yield curve, which has some predictive power in forecasting times of slowing economic growth and even recessionary periods. The chart below shows the spread between the 2-year and the 10-year yield, which remains below zero, indicating that the 2-year has remained persistently above the 10-year, despite its significantly shorter duration. This presents a departure from the normal relationship between these two yields, and in bond-market parlance, is called an inversion. This inversion has persisted for about 4 months since July 5, 2022, though there was also a brief inversion in April 2022.
Supplementary Chart E
The yield curve will tend to tell the market when the central banks may be ready to pivot. The central banks will not pivot because market participants think the pivot is nigh when markets are severely oversold. As of October 2022, the yield curve has remained inverted for quite some time. The inversion has deepened during the summer months, but now the inversion is simply persisting with the spread percentage chopping up and down and ultimately moving sideways on the chart shown above.
3. Crypto market cap just broke below a long-term trendline. While trendlines can be messy and require adjustment, a break of a longer-term trendline like this does not bode well for crypto in general. Perhaps this is just a whipsaw break, and time will tell. And perhaps BTC will be the relative winner, as some have argued, despite crypto overall continuing to decline. SquishTrade will not make such a prediction but remain a follower of what the charts are saying. When BTC's charts begin showing structural change and a primary trend reversal, and rates begin declining at the larger degrees of trend, the conversation can certainly shift to a more positive one for this asset.
Supplementary Chart F
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Five Long-Term VWAPs for BTCPrimary Chart: Five Long-Term VWAPs for BTCUSD with Fibonacci Price Target
SUMMARY:
BTC continues to consolidate and chop in a tight range around $19,246 since mid-September 2022. This range is from $18,232 to $20,225 approximately. Each breakout move to the upside or downside has failed, confounding directional bears and bulls alike.
A longer-term trading range has also been in effect since June 2022. This longer-term range can be identified as between December 2018 and March 2020 VWAPs—$17,929 to $25,486. Or a simple horizontal channel can be drawn at the highs and lows from June 2020 to October 2022, which gives virtually the same range. This 5-month range aligns to some extent with the recent month's price action, which has been in an even tighter range around the $19,246 level.
Price could easily test the longer-term VWAP from December 2018 in the coming weeks. This VWAP lies at $17,929.
Price could easily test the longer-term VWAP from June 2017 in the coming months. This VWAP coincides with the Fibonacci projection at $12,184 discussed as a viable target since summer 2022.
Over the past four to five weeks (over a month), BTC has consolidated around the $19,246 level, which is a Fibonacci level of interest discussed in SquishTrade's prior BTC posts. For example, the following post (and its excerpt quoted below) analyze the specific trading range and how the breakout moves to the upside and downside have failed:
"BTC has chopped above and below this $19,246 level quite a few times, forming a tight consolidation range between and $18,232 and $20,225 approximately. Each breakout move has resulted in a bear or bull trap that fails to follow through with a sharp reversal back to the opposite side of this level."
Here is the chart posted previously showing the failed breakouts and breakdowns:
So the longer-term VWAPs can help place price action in perspective. Like other indicators, they cannot be considered a crystal ball or guarantee. They just help show the broader price environment over a longer term, which can provide a little clarity.
1. The primary trend remains downward. The VWAP anchored to the all-time high remains sloped downward and well above the current price. The average buyer since the all-time high remains well under water. See the Orange VWAP on the Primary Chart.
2. Price remains under the March 2020 anchored VWAP (shown in pink) which is anchored to the pandemic-crash lows. This positioning is bearish. But this is somewhat offset by price trading above the December 2018 anchored VWAP (shown in green). Price is stuck between these two in a sideways range since June 2022. A breakout move to the downside remains a high risk. This sideways action in between these longer-term VWAPS is analogous to the price action in the past month (mid-September to mid-October 2022) showing chop in a range from $18,232 to $20,225.
3. Price remains above the longest anchored VWAPs from the 2017 low and the 2011 all-time low (using all available BITSTAMP data. Price could easily test either of these VWAPs in the coming months given the strength and severity of the downtrend from all-time highs. From a longer-term perspective, these VWAPs can be helpful to watch.
4. The measured move using Fibonacci projections results in a target of $12,184.72, which has been discussed in previous BTC posts.
Supplementary Chart: Measured Move using Fibonacci Projections for Targets
SquishTrade still thinks the $12,184.72 target is viable especially given that price has not reversed the primary downtrend since November 2021. BTC has shown some relative strength compared to other risk assets (e.g., equity indices) by trading in a chop range sideways while the other assets have plummeted in the past month. But until BTC can change the structure materially to at least an uptrend at the primary degree of trend, it remains prudent to assume the current downtrend should be favored to resume at the primary degree of trend. Note that this Fibonacci projection aligns loosely with the VWAP anchored to the June 2017 low with a value of $13,604.01.
NVDA: Placing the Rally in ContextPrimary Chart: NVDA's Primary Trend Since Its All-Time High November 22, 2021, with Anchored VWAPs
SUMMARY:
NVDA appears to have begun a countertrend rally within the context of a sharp downtrend.
Other countertrend rallies have ranged from 28.9% to 40.17%. Don't be fooled by a show of strength that does not change the overall structure. Countertrend trading is lower probability, but can be lucrative if risk is managed with great discipline.
The most conservative upside target (resistance) range for this rally is $128-$130. This would be reached, if at all, in the next week or two.
If the $128-$130 level is reclaimed successfully, then the next higher target to consider is the $145-$150 range discussed below.
Watch the green uptrend line off the YTD low on October 13, 2022 and the red VWAP anchored to the YTD low. If either is broken, all bets are off.
NVDA has rallied about 15.58% off its YTD lows on October 13, 2022. The lows have not been undercut now for a little over a week. Broader equity indices have rallied as well, with the S&P 500 and the Nasdaq 100 both gaining about 2.3% on Friday. NVDA rallied along side both these indices.
1. NVDA's rally could continue into the FOMC meeting on November 1-2, 2022. The FOMC is likely to increase interest rates by .75 percentage points at the November 2022 meeting. The CME's Fed watch tool, tracking federal-funds-rate futures products, shows the probability of a 75 bps hike at 88% for November. Have markets already discounted this? Probably. What is unknown is whether any change in the Fed's messaging will occur or will the Fed maintain its higher-for-longer hawkish stance to deal with sticky inflation. Fed officials have spoken in recent weeks expressing dissatisfaction with the current inflationary environment and its ramifications for price stability.
2. Pullbacks may likely respect the very short-term VWAP anchored to the YTD low (red VWAP anchored to October 13, 2022). Watch this VWAP for support. If the VWAP is violated, it will be important to determine if the violation is decisive (slicing through and showing no sign of reverting back to the level) or if the violation is minor and brief.
3. NVDA just closed above its 21-day EMA, which lies at 124.16. Today's close was 124.66.
4. Before any higher price targets can be taken seriously, NVDA must reclaim its 34-day EMA (currently just below $130) as well as a key Fibonacci level (teal .236 level at $128.10) (shown just below this paragraph). This is the most conservative target zone for a countertrend rally.
Supplementary Chart: Fibonacci Levels
5. A more ambitious zone for a price target may be considered only if the 34-day EMA is recovered first. This secondary target zone comprises two technical levels: (a) the VWAP anchored to the August 4, 2022, high currently located at 143.08, and (b) the gap fill area (teal-blue rectangle) at $145 to $150.
6. It remains crucial to place any rally into context, even if the rally seems like a powerful rally that is unstoppable for a while, like some of the other bear rallies in this market. Massive bear rallies can trick market participants into thinking the lows may be in, and lure them with fear of missing out. Other countertrend rallies have ranged from 28.9% to 40.17%. Don't be fooled by a show of strength that does not change the overall structure. Countertrend trading is lower probability, but can be lucrative if risk is managed with great discipline.
7. The larger context is a downtrend at the degree of the primary trend. All major swing highs and lows over the past year have been lower highs and lower lows. The anchored VWAP at the all-time high (dark purple) remains well overhead. Price would have to rally and hold the $190-$200 level to show material structural change. All other rallies will constitute noise at the larger degree of trend. In other words, the downtrend channel should contain any rallies for the time being. If not, then it becomes appropriate to consider whether a larger-degree structural change is occurring that may lead to a major trend reversal.
Please note that SquishTrade is "cautiously bullish" only for the next week. In the larger scheme, the outlook remains bearish until substantial evidence appears that structural trend change is occurring at the larger degrees of trend. This remains unlikely with interest rates breaking above a 40-year trendline as discussed in this post:
AAPL's Four-Month Triangle May Be BreakingPrimary Chart: AAPL's Four-Month Triangle with Various Trendlines and VWAPs
SUMMARY:
AAPL's longer-term charts show a symmetrical triangle arising from the convergence of a down trendline from January 2022 (dark blue) and an up trendline from March 2020 lows (also dark blue). This triangle appears to be in the process of breaking on arithmetic charts.
When considering that long-term trendlines don't break easily, price may retest or whipsaw above and below this long-term up trendline (from March 2020 lows) two or more times before the line can finally break decisively.
The first major level of importance below this 2020-2022 up trendline is the VWAP anchored to the 2020 lows. This VWAP lies at approximately 127.61 today. On a logarithmic chart , this VWAP coincides with a longer-term up trendline in the coming 2-4 months (see Supplementary Chart B below). This is probably the most conservative downside target if the bear market continues to pressure prices lower.
Another anchored VWAP from the January 2019 lows is approximately at 102.45. This level coincides with the .618 retracement of the 2020-2022 rally starting at the Covid lows, which equals 102.71. See Primary Chart. But before discussing these levels around $102-$103, price must first break through the .50 retracement of its 2.5-year rally from March 2020 to January 2022. The .50 retracement lies at $118.02 .
Another long-term up trendline from the January 2019 low appears on the Primary Chart in light blue. This even longer-term trendline coincides with the .618 retracement of the 2020-2022 rally off the Covid lows and the VWAP anchored to the January 2019 low. If this long-term trendline is tested next year in January or February, it would be about $102-$103, the same level as the VWAP from the January 2019 low and the .618 retracement of the 2020-2022 rally—where the yellow circle appears on the Primary Chart. Could this be where AAPL puts in a lasting bottom at 102-103?
This analysis will briefly cover some of the broader and longer-term levels for AAPL. If the downtrend continues as it has, and the macroeconomic and interest-rate environment remains challenging for equities, AAPL may reach the levels identified.
AAPL's four-month triangle has formed from the convergence of two trendlines: (1) a downward-sloping trendline from its all-time high to the present (dark blue) and (2) an upward-sloping trendline from the pandemic-crash low in March 2020 to the present (also dark blue). On an arithmetic chart, AAPL appears to have violated this multi-year upward trendline in recent days with a couple closes below the line.
One interesting perspective on the 2020-2022 trendline appears on a logarithmic chart. AAPL has shown a more decisive break of this 2020-2022 up trendline, which appears as an orange line on this Supplementary Chart below:
Supplementary Chart A: Logarithmic Chart with Upward Trendlines from March 2020 low and January 2019 Low
But when multi-month triangles like this break, and when multi-year trendlines like this break, it should be expected this could be a process rather than a quick event, assuming the trendline is valid. In part, this is because multi-year trendlines and multi-month triangles do not break and dissipate easily. The lower trendline of the triangle pattern is a multi-year trendline from the Covid lows to the present. Price does not always just break right through such an important level. On occasion, it can slice right through a level deemed consequential and long-term. But often when encountering a very important longer-term level, price can tag it, then break it repeatedly in both directions, whipsawing above and below the line a few times before following the ultimate direction it will take. Or it can break the line and then retest it from underneath a couple times as well.
Levels of importance below this trendline are the VWAP anchored to the March 2020 low. The anchored VWAP from this 2020 lows is shown in light red. Currently, that VWAP lies at $127.61, but this can change over time due to the dynamic nature of VWAP calculations. Because it is longer-term, it shouldn't change too dramatically in the coming days or weeks unless a very sizeable rally or crash takes place.
Another longer-term anchored VWAP from the January 2019 lows is approximately at 102.45. This level currently coincides with the .618 retracement of the 2020-2022 rally starting at the Covid lows, which lies at 102.71. See Primary Chart.
But before discussing this 2019 anchored VWAP and .618 retracement around $102, price must first break through the .50 retracement of its rally from March 2020 to January 2022. The .50 retracement lies at $118.02 .
Another even longer-term trendline can be drawn from the January 2019 low to the present. This trendline intersects with the .618 retracement early next year in January to February 2023 (see the yellow circle on the Primary Chart). This level also coincides with the approximate location of the 2019 anchored VWAP (dark purple)—the current trajectory of this 2019 anchored VWAP looks as if it may run near or through the yellow circle in the next 3-5 months.
Ultimately, this is not intended to be a bold, heroic prediction that AAPL will certaintly reach $127, $118, or $102. If the downtrend structure continues to remain intact, and rallies get sold, then these are viable targets. In short, this is just a technical overview showing that these levels are higher probability targets that could likely be reached if AAPL continues the path of least resistance lower.
Lastly, consider the March 2020 anchored VWAPs discussed in this post and its relationship to the same trendlines discussed except drawn on a logarithmic chart. The 2019-2022 trendline (light blue) coincides with the March 2020 anchored VWAP (or nearly does). This level will be about $127-$130 in 1-3 months. So perhaps this can be both a conservative target or a more intermediate term low in this bear.
Supplementary Chart B: Anchored VWAPs Position Relative to Logarithmic Trendlines
SPY the Anchored VWAPs during Choppy Price ActionPrimary Chart: Long-Term Anchored VWAPs and YTD Down Trendline
Whenever price action gets confusing, it can help to take a step back and consider the larger picture again. Many experts have weighed in after each consecutive low in this year's bear market, with some claiming that the lows are in, and others claiming price has much further to fall after the inevitable relief rallies.
Placing the Current Price Action into Context with Anchored VWAPs with Different Lengths
The Primary Chart shows several important VWAPs anchored to both longer-term and more recent swing highs and lows. The anchored VWAPs all help provide a broader picture of what is happening with price on major equity indices like the S&P 500, which is tracked and analyzed here using the S&P 500 ETF AMEX:SPY . (Note that SPY values are roughly equivalent to SPX values, so SPX is typically a multiple of 10 times SPY, though SPY typically trades at a slightly lesser level than SPX after conversion.)
The anchored VWAP from the pandemic low on March 23, 2020, is gold colored and remains above price as resistance with a flat to slightly downward slope. This VWAP has a value of 385.51 as of today.
The VWAP anchored to the all-time high on January 4, 2022, is orange colored and slopes downward well above price. This VWAP currently has a value of $416.71 as of today.
The Primary Chart also shows two blue-colored VWAPs anchored to recent major swing highs and lows: (i) the swing high on August 16, 2022, and the swing low on June 17, 2022. These also have a sharp downward slope and are above current prices as resistance. These VWAPs values range currently from about 389.08 to $390.57.
Lastly, the VWAP anchored to the September 30, 2022, low, which is the YTD low, is red colored and sloping upward with price above it. Provided price can hold above this VWAP, and as long as it remains upward sloped, it suggests shorter-term trends remain choppy to upward.
The YTD trendline that has contained price (light blue) also confirms what the VWAPs show. This downtrend line has rejected price multiple times even after powerful, sharp multi-week rallies. When this line is broken to the upside and the VWAPs are reclaimed as well, one might begin to discuss whether the trend structure could be changing and whether the lows are more lasting. Until such time, rallies should be viewed with some level of suspicion. Price could rally hard, as it has done multiple times already this year, and convince many that the lows are in, only to reverse and continue the downtrend right at the critical resistance levels.
Placing the Current Downtrend into an Even Larger Context
A recent SquishTrade analysis from October 1, 2022, discussed the 13-year secular uptrend in the S&P 500 ( SP:SPX ), noting that SPX had fallen below the midpoint of the 13-year channel. The post with that analysis can be found here.
Supplementary Chart: 13-Year Secular Uptrend on Logarithmic Chart
To summarize the analysis from that prior post, the current trend—a bear market— could continue until the lower edge of the channel without changing the very long-term "secular" uptrend at all. The lower edge of the channel lies at $3000-$3100 in the coming months. More specifically, the prior post on this 13-year secular uptrend noted the likelihood that price could come into the lower edge of the channel without changing the structure of the longer-term secular uptrend:
"Eventually, price may likely come into contact with the lower edge of the channel—and the long-term secular uptrend will still be intact and neatly contain this bear market. In other words, this bear market at the level of primary trend will not invalidate the secular uptrend, unless price breaks that line around SPX 3000-3100 (considering where the line lies in 3 to 6 months)."
Since the September 30, 2022, low, price has now recovered to retest the midpoint of that channel at approximately SPX 3756, and price is chopping around the midpoint now.
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Author's Comments:
(1) Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate in the comment section. Shared charts are especially helpful to support any opposing or alternative view.
(2) This technical-analysis view does not constitute a trade recommendation or trade setup. Instead, it attempts to offer technical commentary that describes and analyzes price levels, trends, price action, or the broader technical environment as of the publication date. Technical-analysis commentary does not equate to trade setups or recommendations. Within a given price environment, traders bear responsibility for their own trading strategy, risk tolerance, and time frame, and for any due diligence associated with such trades.
(3) This technical-analysis viewpoint could change at a moment's notice, e.g., when price violates a key level of invalidation for a particular view. Further, proper risk-management techniques are vital to trading success.
(4) To the extent countertrend price moves are discussed, consider that countertrend or mean-reversion trading, e.g., trading a rally in a bear market, remains higher risk and lower probability even for the most experienced traders and investors.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified / licensed financial adviser or other financial or investment professional before entering any trade, investment or other transaction.
ETH Will Signal When The Downtrend Will Resume—Just Follow PricePrimary Chart: Ethereum's Bear Rally to Continue a Bit Further Before Downtrend Resumes
Chart shows Bollinger Bands, Fibonacci Levels and Supply Zone
Summary: ETH's short-term countertrend rally continues and points higher in the short-term before the downtrend resumes. Near-term targets are resistance and lie at $1798-$1823 range and 1912.49 over the next week. Only if price can hold and reclaim $1912 will price also have any chance of reaching $2000.
Ethereum's bear rally may continue a bit further this week before the downtrend resumes. The mouth of the Bollinger Bands are widening on the daily chart, indicating increased volatility that typically coincides with a larger directional price move. At this point, price is walking the upper band of the Bollinger Bands, which signals that the trend in the short-term is up. Furthermore, on the Primary Chart above, consider how price has held above the .50 retracement of the June to August rally at 1455, a short-term confirmation that this countertrend rally may last a few more days.
The countertrend rally's continuation is confirmed by the 8-day EMA, a simple but reliable gauge of near-term momentum and short-term trend. Note that although the 8-day and 21-day EMAs point higher in the short-term, bear markets frequently make sudden, volatile price moves in either direction. So traders and chart watchers should be ready for price to fail at any time and resume the larger-degree trend, which is down .
Supplementary Chart A: 8-day and 21-day EMA Point Higher in the Short-Term Despite the Bear-Market Context
Confirming that the short-term trend is upward, consider the anchored VWAPs from key highs and lows shown on Supplementary Chart B. Price has broken above each anchored VWAP placed on this chart including the one from the April 2022 swing high (purple), the June 2022 swing low (green), and the August swing high (yellow). In addition, two simple uptrend lines—two have been drawn to ensure that the entire range of trendline placement is included—also confirm the ongoing validity of the bear rally. Yes, this may frustrate bears for a bit longer—and to be clear, this author remains a bear in the intermediate term for ETH.
Supplementary Chart B: Anchored VWAPs and Trendlines Point to the Bear Rally's Continued Validity
It's helpful to remember that there is no need to guess when ETH will reverse it's current counter-trend / corrective retracement. Price and indicators will signal when this happens. It's so easy to get caught in guessing when price is rallying or declining. When price begins showing signs of failed breakouts, when the 8-day EMA turns down again, when the VWAPs are broken to the downside, the technical evidence will then show when ETH is ready to resume its downtrend.
Lastly, consider the key levels in addition to the supply zone around 2000-2100 shown on the Primary Chart. Major resistance lies at 1912.49, 2230.95 and 2549.41. Note: These Fibo levels shown below are more intermediate-term levels. It would take a major price move to reach $2549.41, though anything can happen including jaw-dropping rallies in bear markets—but this is not my prediction.
Supplementary Chart C: Intermediate-Term Fibonacci Resistance Levels
Lastly, consider the levels that are most important to watch this week before considering whether $1912-$2230 can be reached. Price must first must hold $1726 and $1751. Next price must reclaim the .618 retracement of its recent decline at $1798 / $1800. If that holds, then $1912 / $1915 come into play.
Supplementary Chart D: Short-Term Fibonacci Resistance Levels
www.tradingview.com
Please note that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation, and countertrend trading, e.g., trading a rally in a bear market, is tricky and challenging even for the most experienced traders. Countertrend trades are lower probability trades as well.
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
BINANCE:ETHUSDT
CME:ETH1!
BITSTAMP:ETHUSD
COINBASE:ETHUSD
KRAKEN:ETHUSDT
