BitOoda Morning Report - 2/7/2019 Fundstrat's Technical Analysis
Today we follow-up with our ‘BTC Contraction/Expansion Report’ from Monday 2/4. In that piece we wrote “The second strategy that you could deploy would be to place a BUY-STOP order just above the tip of the last 1-day candle, and SELL-STOP order just below the bottom tip of the last 1-day candle. The idea here is that when the move is made, you can have a good entry point for the beginning of this new ‘trend’.”
If you followed this strategy you would have initially gotten long at the magenta horizontal line at roughly $3,435 BTC:
As we dove further into this trade we wrote “Let’s get technical and go one step further on this second trade. When you get filled on your initial stop-order (let’s say you bought on a break out rally) you would then quickly place a SELL-STOP order at the SAME PRICE as the purchase, but for GREATER SIZE than the original trade. This concept is that if the break out FAILS, then a reversal of greater momentum would be initiated. This 2nd trade would not only cause you to break-even on the initial order, but actually reverse your position and give you the ability to capture that false break-out reversal.”
If you followed this ‘swing-trade’ strategy, you would have broken even on the first buys at $3,435 and then gotten SHORT at this same level. As we can see, this strategy has paid off since have had a small gap lower into the $3,340 - $3,380 range.
The exit from this trade is where it gets tricky. Our good friends at Fundstrat put out a very thorough piece yesterday, titled "CRYPTO TA STRATEGY: Cryptocurrencies at risk of breaking the Q4 lows", that gave us some defined price targets. Here are the key points from their report:
• Another important retest of support – Crypto currencies are approaching another key inflection point, as they retest their Q4 lows within downtrends that began in early 2018.
• Price structure is weak heading into retest - A successful retest of the Q4 lows developing into a double bottom price pattern remains a possibility, but the price structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows. The charts below illustrate our proprietary FS Crypto FX250 A/D line, a measure of breadth within the 250 small-cap crypto currencies, which is at risk of breaking to new lows. Slide 4.
BTC testing its long-term trend at its 200-week sma - In mid-December, we highlighted the possibility that BTC might begin to bottom at its rising 200-week sma, a level around which other risk assets have often bottomed during bear markets. The S&P’s response to its 200-week sma in December is case in point. However, the lack of upside follow through by BTC from its December lows is a concern, particularly given most other risk assets have since surged AND while the US dollar has weakened in 2019. Slide 11
• Key BTC and ETH levels: A break below the Q4 lows at BTC 3100 would imply a decline to 2270 while a move above BTC 4200 is needed to signal BTC is beginning to improve. Similarly, a decline below ETH 100 would signal a decline to 80 while a move above ETH 110 should support a rally to 130. Slide 10-17
What stands out to us in these key points from the Fundstrat report is the downside price target of $2,270!!! In our Silver vs Bitcoin Bubble Analog, BitOoda has stated $2,400 could be the next low if this selloff continues. It seems our rough analysis vs Fundstat’s very precise calculations are in alignment. Only time will tell…
If you followed this strategy you would have initially gotten long at the magenta horizontal line at roughly $3,435 BTC:
As we dove further into this trade we wrote “Let’s get technical and go one step further on this second trade. When you get filled on your initial stop-order (let’s say you bought on a break out rally) you would then quickly place a SELL-STOP order at the SAME PRICE as the purchase, but for GREATER SIZE than the original trade. This concept is that if the break out FAILS, then a reversal of greater momentum would be initiated. This 2nd trade would not only cause you to break-even on the initial order, but actually reverse your position and give you the ability to capture that false break-out reversal.”
If you followed this ‘swing-trade’ strategy, you would have broken even on the first buys at $3,435 and then gotten SHORT at this same level. As we can see, this strategy has paid off since have had a small gap lower into the $3,340 - $3,380 range.
The exit from this trade is where it gets tricky. Our good friends at Fundstrat put out a very thorough piece yesterday, titled "CRYPTO TA STRATEGY: Cryptocurrencies at risk of breaking the Q4 lows", that gave us some defined price targets. Here are the key points from their report:
• Another important retest of support – Crypto currencies are approaching another key inflection point, as they retest their Q4 lows within downtrends that began in early 2018.
• Price structure is weak heading into retest - A successful retest of the Q4 lows developing into a double bottom price pattern remains a possibility, but the price structure for most cryptocurrencies remains weak and appears vulnerable to a pending breakdown to lower lows. The charts below illustrate our proprietary FS Crypto FX250 A/D line, a measure of breadth within the 250 small-cap crypto currencies, which is at risk of breaking to new lows. Slide 4.
BTC testing its long-term trend at its 200-week sma - In mid-December, we highlighted the possibility that BTC might begin to bottom at its rising 200-week sma, a level around which other risk assets have often bottomed during bear markets. The S&P’s response to its 200-week sma in December is case in point. However, the lack of upside follow through by BTC from its December lows is a concern, particularly given most other risk assets have since surged AND while the US dollar has weakened in 2019. Slide 11
• Key BTC and ETH levels: A break below the Q4 lows at BTC 3100 would imply a decline to 2270 while a move above BTC 4200 is needed to signal BTC is beginning to improve. Similarly, a decline below ETH 100 would signal a decline to 80 while a move above ETH 110 should support a rally to 130. Slide 10-17
What stands out to us in these key points from the Fundstrat report is the downside price target of $2,270!!! In our Silver vs Bitcoin Bubble Analog, BitOoda has stated $2,400 could be the next low if this selloff continues. It seems our rough analysis vs Fundstat’s very precise calculations are in alignment. Only time will tell…