What a week! The last two weeks have been a near unabridged rally. Looking at the Fear & Greed sentiment meter, we can see the sentiment heavily shifted toward Greed since the 28k area, thus I expect many retail traders to have turned their bias bullish short-term. Interestingly, we came from Neutral territory into Greed once we saw that break-out above 41– 42k, meaning that from a retail sentiment point-of-view, 42k is a bias pivot.
Another thing that I use for retail is the Funding Rate. A great metric I use for short-term bias or sometimes noting institutional manipulation. Abit more complicated, but big players use Futures to offset their Spot holdings in an attempt to maintain a Delta Neutral profile, aka to manage their exposure and harvest Funding Rates in the process. Didn’t figure that out myself, creds to @zhusu on Twitter.
Regardless of the rally, we saw price break back below into the range, so I’m now looking for shorts, ideally for a sweep into 28k. I marked out two possible scenario’s last week for Bitcoin, and the short one is the one we got, so I’m sticking to my plan. This sweep of 28k may take another week or two to unfold with lots of range-bound trading action.
I’ve marked out the setup I’m looking to trade. Entry between $39,400-$39,800 (as high as I can get it), with invalidation at $42,500 high, targeting $36,000, $32,600, $28,500 in that order. If I see a clean break into $36,000 for my TP 1, I will shift my hard-stop to my entry.
Alternatively, we may see another retouch of $42,500, which if we fail it again would make me even more secure on looking for shorts, but of course I would be stopped out. I would look to half my risk and trade one of the two red lines (willing to shift my bias to bullish if we see another clean break-out and hold this time, targeting the April Low).
Ethereum
Ethereum looks much stronger than Bitcoin and I expect outperformance over the next bit. Where as the Bitcoin June high has already been taken, Ethereum’s June high is very much intact, which is my primary focus.
The setup I posted on Ethereum last week, I have since closed with my first profit level hit around $2,600. I decided to close the remainder of the position and not wait for the $2,900 level since price was looking a little skittish to me. As you can imagine I regret that decision by now, but I will wait patiently for the next setup, to which I’m looking for a reaction around $2,900.
My plan is to scale off some spot upon hitting the June high as a manual short, of sorts. I will look to long if we hold above it, into $3,300-$3,500 with a tight stop. Or I will look to short back to the bottom of the range, similar to Bitcoin if we fail to hold the $2,900.
Another clue for me as to a short-term bullish motivation for Ethereum is the hidden bullish divergence; not the blue lines.
I don’t have the time to post a chart at this moment on it, but take a look at ETHBTC for yourself, the pair shows a nice high around 0.07, which is in the short-term what I’d look to be swept. Fail that level and we may return to 0.063>0.057, clean break-out and we may head near or into the high around 0.075.
That’s it for today, hope it brought you value.
Go kick some ass.
Cyril
Update Aug 6: Bitcoin trade invalidated, mostly exited, now waiting for reaction. I am still more leaning towards the short side but if it holds with strength, I would flip to long and enter with half risk. Ethereum has hit our June high and I have begun scaling some off. Good luck trading!
