I have a few indicators that I consider my gold standard. These indicators have proven to be reliable over long timeframes. They are slow moving and are never wrong for very long.
Markets swooned fast and hard but zooming out gives us a better idea of what these large moves mean. Where are the current prices in relation to the 200 DMA? This gives us some grounding on risk reward going forward.
BTC went parabolic from 12k to 64k hitting the overbought red line multiple times.
As BTC formed a topping pattern on the daily cloud (chart below) it created a bearish TK cross on May 3rd at $53k before diving into the cloud to signal uncertainty and finally confirming support breakdown and bear mode at 44k. BTC needs 48k to regain bullish trend (price back above cloud).
On May 11 BTC price dove into the cloud to close under 50k.
I signaled this breakdown with:
— Coinspeak (@coinspeak_io) May 11, 2021
When ETH broke above $2800 I declared it was now leading the market. Similar to 2018 ETH peaked ~4 weeks after BTC.
In 2018 ETH topped one month after BTC then the whole market crashed.
BTC topped 3 weeks ago.
— Coinspeak (@coinspeak_io) May 7, 2021
Despite a 50% correction ETH still hasn’t touched it’s 200 DMA. The 200 DMA acts as a magnet at all times on price. For this reason I suspect the market has more downside as ETH is the the current bellwether.
The counter to this is that ETH found support on the top of the daily cloud. However, to maintain bullish trend price must STAY above cloud which would mean ETH $3300 by July. Watch for any breakdown of ETH into the cloud as an omen the entire market has further downside near term.
Greed is a powerful drug. I broke some of my trading rules and went light on my sells into the height of the bull. It’s a lesson to learn. Unfortunately I’ve learned it more than once! As usual, I find my personal guru Jesse Livermore had the right answer all along.
When someone asks me about trading I tell them to pick 1-2 indicators and a single timeframe and trade it like a robot. It’s harder to do than it sounds.
There is a lot of news in the markets I’m not going to cover. Stick to the daily charts and be patient. I don’t think Crypto is out of the woods yet.