Markets are up, but can they sustain this momentum?
In today’s issue, we’ll discuss the importance of taking a step back and looking at a market’s structure rather than following the herd.
Also, updates on BTC, ETH, ADA, and LINK.
Let’s get it!
Markets Often Rhyme
Bitcoin is doing the same thing now that it did between February and May. The only difference is that the scale is much smaller.
Yet, a glance around “crypto Twitter” and you’d think the bull market just started.
And maybe I’m wrong. Maybe we don’t get the Bitcoin pullback to $40,000 or Ethereum to $2,700.
The point here is that you have to be careful and make up your own mind as to what you think happens next.
Obviously, if you’re just hodling, then what happens this month or next doesn’t matter as much.
But for those who are trading, you need to make sure you’re not about to get caught offside.
What do I mean by that?
I mean don’t blindly follow the herd on Twitter. My entire feed is bullish right now, yet the September 7th selloff broke Bitcoin’s uptrend, and it looks exactly as it did before the May selloff.
I have my invalidation levels set, though. Because at the end of the day, nobody knows where any market is going. The best we can do is speculate with the data at hand.
As I’ve been saying, if Bitcoin closes above $50,000 on the daily chart, then it’s likely heading higher, along with altcoins.
But until then, you’ve got to be careful, especially in markets that are up thousands of percentage points since this time last year.
Bitcoin is churning higher today, up about 2% as I write this. This should surprise no one as just yesterday (on Twitter) I wrote that BTC should target $48,800 following a breakout.
We got that breakout near yesterday’s close. So far today, Bitcoin is well on its way to $48,800.
Just keep in mind that the resistance area could extend as high as $50,000. That’s the level buyers need to clear on a daily closing basis to convince me that $40,000 isn’t in play.
Until then, I’ll continue to believe that this week is a corrective move before the next selloff toward $40,000. It’s the same pattern as late April and early May.
ETH is currently trading at its consolidation highs at $3,580. It’s also very close to the 0.786 Fibonacci retracement of the May to June range at $3,550.
This is the area where I think we could get a reversal. ETHUSDT may try to tag the $3,630 area or even $3,700, but I do think we get another push lower later this month.
If Bitcoin reaches $40,000 this month, then Ethereum should be trading somewhere near $2,700.
Of course, $3,200 and the $2,900 – $3,000 area would act as support first.
A daily close above $3,700 and a retest of the recent $4,000 high would convince me that ETHUSDT isn’t heading lower.
ADA hit a wall of sellers today in the $2.60 area. I mentioned this on Twitter.
It’s the intersection of ascending channel support and a horizontal level from the September 9th highs.
So far, ADAUSDT is coming off of that level rather aggressively.
I still think there’s a good chance we see ADA trade to $2 this month. However, as I’ve said for the last week, it’s going to take a daily close below $2.30 to confirm the breakdown.
Alternatively, a close above $2.60 would indicate strength in the near term.
LINK recently broke out from the $30 area. It’s also retested the $30 level as new support.
However, the volume on the breakout has been lackluster. And if Bitcoin is about to break lower, it will drag LINKUSDT with it.
That said, the market is currently holding above support. So until it closes back below $30, trying to short it is a risky endeavor.
Key support below $30 comes in at $25. That would be my target if I play the false break here by shorting a close back below $30.
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