The macro environment remains complicated. While the banking crisis seems to have abated for now, the market is still grappling with the view the Fed will have to cut rates in H2.
Macro vs Technicals
The macro environment remains complicated. While the banking crisis seems to have abated for now, the market is still grappling with the view the Fed will have to cut rates in H2. US credit default swaps have been rising steadily for a while, the USD has come under pressure, while rates have been sitting in a range for the last few weeks but threatening to see yields breakdown further. Meanwhile, the Nasdaq and big tech have performed well, while the Russell 200 has taken most of the pain.
Crypto seems to be playing its own game, with, as Dalvir highlights, support coming from the successful Shapella upgrade. The charts see some two-way corrective price action in the sessions ahead, but the underlying bull trend has room to run still.
Ethereum vs Bitcoin
Wild swings in the last couple of weeks has resulted in the ratio moving aggressively back to the 0.067-0.68 area of resistance. The nature of the move, after consistently holding Fibonacci support around 0.63, suggests we have developed a higher low earlier than expected. The ratio should now be limited on pullbacks to around 0.066/0.065 for a move to around 0.073 and then into a range trade again.
After a three-week consolidation phase, prices are seeing the extension higher we have been looking for, continuing the reversal from the ~15,500 lows at the end of last year. Short term, my studies suggest a micro 5-wave cycle is completing with this rally, with intra-day studies at extreme overbought levels. As such, there is a high risk of another pullback before the move extends. Short-term support lies around 29,400-28,700. That’s the ideal region for a higher low to develop. However, it would take not only a break of that support, but then 27,400 and 25,400 key trend supports to suggest the whole rally phase is a false head and shoulders break.
Until then, the underlying outlook remains bullish after the bear cycle from the 2021 highs completed last year at ~15,500.
First targets and resistance lies in the 33,000 region, but the main target is 36,000, that being Fibonacci and the head and shoulders projection. I suspect we see that region hold on the first test, but ultra long-term targets are 42,000-48,000.
After the recent consolidation, prices are seeing the move higher we have been looking for, accelerating into market leadership role again on the break of speed line resistance. The break of last August’s highs at 2020 also takes us into the next phase of the bull recovery.
As such, pullbacks should remain choppy and corrective in nature, holding over rising trend support in the 1950-1800 region. A decline through there would suggest this has been a false break and return to the previous range around 1600.
Until then the bigger picture wave C initially targets ~2400/2450 resistance, but through there can extend towards 3000-3300.
Robin is a global market veteran, with over 30 years of experience on the sell and buy-side, as a strategist and trader. He now provides strategic trading and investing advice to hedge funds, family offices, HNW individuals and trading desks around the globe.
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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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