I always believe in keeping one’s investing and trading as simple as possible. If you can draw one obvious line then you are in good shape. You don’t have to know the outcome of the direction, just that the move will be big because then you just jump on it when the move is clear.
As soon as you start drawing lines all over your chart you are dealing with noise, and noise is randomness and hard to make directional money from.
So here we have Ethereum in an obvious setup:
We are at the brink of a big jump or a very nasty leg down towards a capitulation.
I’m a bear so you can guess what I think happens next but actually I can imagine a classic W from here and I try not to be wedded to my stance so I’m prepared to see it happen, because situations can change dramatically whether or not you are bullish or bearish. Flexibility aside, I am not expecting a meaningful bounce and a resumption of the crypto moon shoot in the near or medium term.
In any event, this should be a case of trading what you see.
As an investor I can foreswear a $1,000 upside because I’m expecting a continuation of the crypto crash and I’m expecting levels around $1,000 before long. I also think a break down will be a lot more definitive than a bounce. In summary, I am expecting the price to break down through this level and head off quickly towards $1,000.
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A breakdown through this level creates an extremely likely continuation towards $1,000, while bulls will be watching for the classic W shaped recovery, that in my eyes could easily disappoint.
I think that global markets are about to experience a cash squeeze in the wider economy where long bond yields fall and short-term interest rates rise and liquidity tightens. This will come from inflation fears creating a “risk off” environment. This won’t help crypto at all, as crypto is an ultra risk-on trade and any correction in the stock market will suck margin call money out of crypto back into the world of ‘fiat.’ That could deal the final leg of the crash to crypto which in any event is coming, catalyst or no.
Here is a comparative of 2017-2018 versus now:
It’s not a pretty sight, but the end of this cycle is the beginning of the next and that, too, will be glorious.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.