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Thursday 17 October 2024

Proof Of Life

I was looking at this rising wedge on SPX posted on twitter earlier this week by someone with the comment that the break above this week is a bearish overthrow that would likely precede a break down from the wedge and then a likely 38.2% to 61.8% retracement of the wedge. Obviously I’ve been posting that wedge and looking at it every day in my premarket videos for weeks, and it is a very decent quality pattern, but I’m doubtful.

If we were going to see that retracement happen, then the obvious time to do that would have been over the last four weeks or so, in the obvious bearish window into late October. That didn’t happen, so unless we see some evidence that the bears are still in the game, I’m going to remain doubtful.

That said, if we do see some retracement from here, I would note that there is currently a possible small double top setup here that on a sustained break below 5804.48 would look for a target in the 5730-7 area. If that was to deliver then rising wedge support, currently in the 5700 area, would be in range.

Could we see that happen? Sure. Will we see that happen? Well I won’t be holding my breath waiting.

SPX 15min chart:

If we are going to see that happen then the first step on the way would be a break and conversion of the daily middle band, currently at 5760, to resistance. I would note that there is still a fixed weak RSI 5 sell signal here, and that if there wasn’t, a possible full RSI 5 sell signal would be brewing.

If SPX breaks higher here then the obvious next target is the resistance trendline above, currently in the 6125 area, and rising of course.

SPX daily BBs chart:

There is also a possible short term double top setup here on Dow, and a sustained break back below 42.7k would look for a target in the 42.1k area. Decent looking support in the 41.8k area, then rising wedge support currently in the 41,500 area.

The rising wedge is also high quality, like the one on SPX, and there is still a fixed daily RSI 5 sell signal on Dow as well. Could be. We’ll see.

INDU 15min chart:

As I mentioned there is still a fixed RSI 5 sell signal on Dow, and as with SPX, if there wasn’t already a sell signal fixed here, another would be brewing.

On the bigger picture I have no clear target above in the event of a break up. I’ve drawn in a couple of options, of which the higher trendline is better quality, but we might just need to wait for the next high.

INDU daily BBs chart:

Any sign of a turn on NDX? Well we haven’t been seeing new highs there, and there’s no short term double top. There’s a short term rising wedge there too, with wedge support currently in the 19,500 area. We’ll see.

On the bigger picture NDX backtested the daily middle band, currently at 20044, earlier this week and it held perfectly. If that tests again and breaks, that would be an initial sign of weakness.

NDX daily chart:

I’m skeptical about the bear case here, as the setup isn’t strong, and the timing was a lot better a month or even a fortnight ago. As long as the daily middle bands are holding as support across the board on the equity indices, there’s not much to see on the bear side. If those start breaking with any confidence, I’ll look again at possible downside targets.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first and do a short premarket review every morning.

Monday 14 October 2024

Hard Break Up On Crypto

Yesterday afternoon I sent a quick update post to all the subscribers at my Crypto SubStack to warn them that there was now a high quality bull flag setup on Bitcoin (BTCUSD) that on a break up would look for a target at a retest of the September high at 66.5k. I also noted that the hourly RSI 14 sell signal that had formed and fixed as Bitcoin was hitting flag resistance had reached the possible near miss target. I was thinking of circulating this more widely but SubStack was having issues yesterday afternoon, so I thought I’d just cover this in a post today.

This is the chart I posted yesterday.

BTCUSD 60min chart (yesterday afternoon):

This is how the chart looks at the time of writing, with the flag having broken up and got fairly close to the flag target. I’m expecting that target should likely hit in the next day or two. It is therefore too late now to warn anyone today but that does bring me to the bigger picture that I have also been looking at over the last few posts.

BTCUSD 60min chart:

On the bigger picture the overall setup is a likely much larger bull flag and the most bearish aspect of the Crypto charts when I was writing on Friday was that the daily middle bands were continuing to hold as resistance, though that has now changed.

Now the break above the daily middle bands has to hold for a couple of days for the daily middle band to convert to support, but so far this looks like a conviction break which on Bitcoin has also been a conviction break over the 200dma. On a move back over 66.5k, the obvious next big target would be larger bull flag resistance, currently in the 69k area.

BTCUSD daily chart:

On Ethereum (ETHUSD) there is no bull flag target, but the move today is a hard break over the 50dma and daily middle band. On a move higher the next big targets would be the 200dma, currently at 3045, and declining resistance from the 2024 high at 4092.73, currently in the 3720 area.

I would note that the obvious bigger picture patterns forming on here on Bitcoin and Solana (SOLUSD) are bull flags. That’s not as clear on Ethereum, which may have deeper issues and underperform both of the others in the longer term.

ETHUSD daily chart:

Solana has also broken back hard over the daily middle band and less so the 200dma, currently at 152.20. The obvious next target would be a retest of the September high at 161.73 and, above that, larger bull flag resistance now in the 185 area.

SOLUSD daily chart:

I was saying on Friday that on the bigger picture Crypto was likely setting up for another bull move. That move has likely now started, and if Bitcoin and Solana can break up from their overall bull flag setups, then those targets would then be a retest of the all time high on Bitcoin at 73.8k, and a retest of the 2024 high on Solana at 209.86.

Given the correlation between Crypto on equities, what does this suggest about prospects for equity markets? Well, nothing that could be interpreted as bearish.

If you’d like to see more of these posts and the other Crypto videos and information I post, please subscribe for free to my Crypto substack.

I'm also to be found at Arion Partners, though as a student rather than as a teacher. I've been charting Crypto for some years now, but am learning to trade and invest in them directly, and Arion Partners are my guide around a space that might reasonably be compared to the Wild West in one of their rougher years.