Merry markets; cause for caution
December 27, 2021
Last week we discussed the descending channels that BTC and ETH formed while L1’s soared. This week the markets have been merry as BTC and ETH have since broken out of these channels and a market wide bounce has persisted through the Christmas weekend and weekly close. I’m sure many traders had gains on their wish list and Santa certainly delivered.
More significantly though, we’ve finally arrived at the range high, and the reaction will likely serve as a groundhog day of sorts: 6 more weeks of ranging, or is alt season coming early?
Let’s discuss.
On the BTC daily chart, price has run up to and wicked over the range high. I don’t mean to be a scrooge, and while nothing is confirmed until today’s close, a bearish sweep over the range high is not something that bulls want to see.
Furthermore, the run up to current price was fairly expansive, and a failure to close through the daily LG marked at $51,640 would indicate that these inefficiencies need to be filled before further upside. Any longs before claiming both this level and the range high on macro time frames are foolish in my opinion. Price is at the last line of resistance so buying now offers the absolute worst R. The fact that the range low has not been taken is further cause for cautiousness, and my advice is to take any profits now and wait for a daily reclaim of both the range high and LG marked at $51,640.
The weekly hasn’t offered much yet but it certainly is worth looking at.
A claim of the daily levels discussed would indicate that this weekly LG is to be filled, and full on bull market confirmation (for me) would come in the form of a claim of this level. A few weeks ago we discussed how BTC has acted like a sea anchor for the rest of the market, and the fact that ETH and alts have already bounced suggests to me that, should BTC claim this weekly level, the anchor will be weighed at last and alt season can properly commence; a BTC run up to all-time high would almost certainly result in alts punching a massive hole through the stratosphere
There is certainly a lot of work to be done until then, and while we’re close to adding on spot positions, there’s a few things to look out for on an intraday basis in the week ahead.
SOL has reached its 4h target and has formed a bearish sweep + LGR above a high, signaling a reverse in flows. This puts us on for shorts to the following levels:
I will be paying close attention to any lower high 30m sweeps at logical 4h levels, the obvious one being a retest of the 4h LGR. Given what was discussed above, shorts just feel right given that we’re at high time resistance.
Shorts are also on for AVAX, given that we’ve hit a previous target by filling in an LG, raided the high, and have formed an LGR.
LH 30m sweeps to the next target, all day.
And let’s not forget LUNA!
We’ve lost the LG here, so where do we go? The next unfilled LG. Again, 30m lower high sweeps all day. Keep it simple.
In summary, my intraweek bias is bearish which is mainly due to the fact that we’ve finally arrived at high time frame resistance. No need to FOMO into anything yet: alts have pumped heavily and are now putting in all the signs of cooling off as BTC struggles to break through its current range high. Ride the waves and wait for high time frame confirmation.
May your days be merry and bright.
