Very Nice Looking Short Setup On Crypto Here

I was looking at the nice short setup on Crypto earlier this week and both BTCUSD (Bitcoin) and SOLUSD (Solana) then broke back over the very obvious resistance at the 200dma. The obvious question is whether this is a break up and possibly that might be the case, but it doesn’t look like it.

A weak RSI 5 daily sell signal has fixed on ETHUSD (Ethereum), and a full daily RSI 5 sell signal has fixed on Solana. These have a solid history of making at least the minimum target at the 35 level on the daily RSI 5.

What has changed is that there is now also a possible daily RSI 5 sell signal brewing on Bitcoin. That hasn’t fixed yet, but if it does, then there are six previous signals on the chart below, and five of those reached the full target at the 30 level on the daily RSI 5 and the other reached the minimum target in the 35 area.

BTCUSD daily chart:

On the Bitcoin hourly chart there is now a high quality rising wedge from the last low, that is breaking up slightly. That could be a break up, but might well be a bearish overthrow before the wedge breaks down. A possible hourly RSI 14 sell signal is brewing.

BTCUSD 60min chart:

On Ethereum there have been seven daily RSI 5 sell signals on the chart below before the current one, two of which were weak sell signals. Five of those made the full target at 30 on the RSI 5, including both weak signals, and the other two made the minimum target in the 35 area.

ETHUSD daily chart:

On Solana there have been four RSI 5 sell signals on the daily chart below before the current one, and one of those failed, with another two reaching the full target at 30 and the other reaching the minimum target at 35.

SOLUSD daily chart:

When I capped the chart below Solana was testing a possible triangle resistance trendline which is now breaking, but there is another possible hourly RSI 14 sell signal now brewing there, and the move this morning has hit the resistance trendline on a possible short term rising wedge.

SOLUSD 60min chart:

Could Crypto break up through all this? Absolutely yes, as any long or short setup can fail. At this point though I’d lean 80% short on this setup and at minimum I’d be very cautious on the long side. At least a decent retracement looks likely. We’ll see.

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 Cryptos 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. 

Rhyming Bearish Triangles on Oil & Gas

There’s an old saying from Mark Twain that history doesn’t repeat itself, but it often rhymes, meaning that the same patterns recur, but are never quite the same.

Back on Sunday 11th August I recorded a The Bigger Picture video in which I was looking at two possible bearish triangles on oil and gas. These weren’t at the same stage, but I have been thinking that they might well be part of the same possible overall sequence.

A couple of weeks later the triangle on oil (shown here on $WTIC), broke down with a minimum target at a retest of the 2023 low at 63.57. This is the chart I posted with The Bigger Picture video I recorded on 25th August.

WTIC daily chart from 25th August:

I was looking at the two triangles after the oil triangle broke down, and noted that they were at different stages, as the triangle on natural gas was not fully formed, and if it was going to continue forming, then the next obvious target would still be a test of triangle resistance currently in the 3.0 area. This is the chart I posted with The Bigger Picture video I recorded on 11th August.

NATGAS daily chart from 11th August:

After the oil triangle broke down it made good progress towards the retest of the 2023 low, before starting a substantial rally that took oil to a perfect backtest of broken triangle support, which is holding so far. Oil has turned back down and the next obvious target is now a retest of that 2023 low at 63.57, and I think that it is likely that target will be hit in the next few weeks.

WTIC daily chart:

While oil was breaking down natural gas traded sideways, and when oil started to rally at the start of December, natural gas headed towards triangle resistance, hitting that at 2.89 and that is holding so far. If that continues to hold then the next obvious moves would be a move to triangle support, currently in the 2.01 area, then a partial fifth wave rally back up to perhaps the 2.5 area, then a break down from there with a target at a retest of the February 2024 low at 1.52. I’ve marked the path on the chart below, though I wouldn’t read anything into the timing of those moves.

NATGAS daily chart:

So what’s happening on the bigger picture here? Well I think we may be watching a bottoming process for oil and natural gas from their 2022 highs. An ideal double bottom rallies about 50% from the low, then retests it before rejecting back up.

After the low at 63.57 in May 2023 oil rallied just under 50% of the decline from the 2022 high at 130.50 and looks likely to retest that low in the next few weeks. That will establish a possible double bottom setup that on a sustained break back up over 95.03 would look for a target most of the way back to the 2022 high at 130.50. That means that this current sequence may be setting up one of the most interesting long trade setups of the next couple of years.

WTIC weekly chart:

The bigger picture view looks a bit less exciting on natural gas where the possible low forming would be more modest in trend reversal terms, while natural gas is a much tougher trade because the monthly rolls between futures contracts can easily eat up even a large potential profit that takes a few months to deliver, but it’s still interesting.

A retest of the February 2024 low at 1.52 would set up a possible double bottom with resistance at 3.16 and, on a sustained break over that, a target in the 4.80 area. That would get natural gas back close to a 38.2% retracement of the 2022-4 decline, which I have in the 4.77 area. That would be a more than triple the level of a low in the 1.52 area but, as I said, that is a much tougher trade though, if seen, I’ll certainly be fixing my domestic energy costs for a couple of years at that retest.

NATGAS weekly chart:

Could oil & gas retest those lows and then just continue down? Sure, though there is solid established support on oil in the 62-4 area, and even stronger long term support on natural gas in the 1.5 to 1.6 areas, in the case of natural gas a level unbroken since 1995 so, if seen, my lean would be towards making a low on both in those areas. We shall see.

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Equities Still In The Big Inflection Point

In my post last week I was looking at the big inflection point here on equity indices, and they are still in that inflection point, though there have been some developments since which I’ll go through today.

I use the $SPXADP daily chart as one rough and ready guide to where there might be a retracement or consolidation coming on SPX, and that hit the key upside level at 30 on Friday. There are 11 previous hits of 30 on the chart below (red dotted vertical trendlines), and all of them signalled either a retracement starting within a couple of days (seven instances) and/or a sideways consolidation lasting at least two or three weeks, so it is likely that we will be looking at that again here.

SPXADP daily chart:

That wasn’t the only significant hit on Friday, as SPX also saw the highest daily volume spike since the start of the chart below in late June 2021. As I say on the chart below, this is usually a helpful topping or bottoming signal and, in this case, it would be a possible topping signal. There are nineteen previous hits on the chart below, counting consecutive day hits as the first hit as a single hit, with eight of those during a strong run up. Again, all of those were followed by at least modest retracements not long after.

SPX daily chart:

The SPX weekly chart I posted a week ago showed a possible large resistance trendline that has since been retested and is holding so far. That doesn’t mean that we’ll be seeing a retracement to the corresponding support trendline now in the 4600 area, but it is interesting.

SPX weekly chart

In the short term I’ve been talking in my premarket videos this week about the charts above, and suggesting that if the setup for a decent retracement here was to improve further, then a smaller retracement here to take the daily RSI 5 on SPX, NDX and Dow down under the 70 level, followed by a high retest and fail could set up some really decent quality possible daily RSI 5 sell signals, as well as nice double top setups.

I’ve been looking at the short term double top setups on SPX in the morning, but there’s a smaller setup on ES that is trying to break down today, that on a sustained break below the 5773 ES would have a target in the 5748-53 ES area. The direct equivalent to the SPX setup I’ve been looking at is the larger possible double setup that on a sustained break below 5733 ES would have a target in the 5668/9 ES area.

ES Dec 15min chart:

There is also a possible double top setup on the NDX chart that looks interesting. On a sustained break below the 19620 area the double top target would be in the 19240 to 19290 area. Not a huge retracement but, if seen, would likely deliver the decline on the daily RSI 5 sell signal needed to set up possible negative divergence there on a subsequent retest of the high at 19984.47.

NDX 15min chart:

I have mixed feelings about reversal here, as the Fed gave the markets a half percentage point cut last week and is suggesting there may well be another similar cut in December.

That said, there are some indications that we may be building up to a decent decline here, and unless we see some decent resistance breaks here, the setup on energies over the next couple of months looks pretty bearish. We’ll see.

I’m planning a post on the setups on oil and natural gas tomorrow. If you’d like to see that, watch out for it on my twitter.

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Nice Looking Short Setup On Crypto Here

There is a decent correlation between the trends on equity indices and Crypto, as I’ve mentioned before, and we are seeing a small but significant looking inflection point on both of them today that I was looking at in my premarket video on Crypto today.

The chart below shows one of my SPX daily charts with SOLUSD in the background. You can see the possible small double top setup on SPX here, and I have a similar setup on SOLUSD (Solana) and BTCUSD (Bitcoin), both of which I will be showing further below. The correlation isn’t perfect, but it is strong.

SPX daily BBs vs SOLUSD chart:

On Bitcoin there is no negative RSI divergence currently on the daily chart, but it has been stalled the last few days at the test from below of obvious resistance at the 200dma, currently at 63882. If we are going to see a retracement or serious reversal then this would be a really obvious place to see that.

BTCUSD daily chart:

On the Bitcoin hourly chart there is an ok quality rising wedge, an open hourly RSI 14 sell signal and a small double top setup has formed that on a break below 62.7k would look for a target in the 60.6k to 60.7k area.

BTCUSD 60min chart:

On the ETHUSD (Ethereum) daily chart there was a touch of the daily 3sd upper band a couple of days ago, normally a decent indicator that a retracement or consolidation will happen next. There is a possible weak RSI 5 sell brewing there. There’s no obvious topping setup there but if that fixes then I would note that there are seven previous daily RSI 5 sell signals on the chart below, two of those weak, and all of them at least made the possible near miss target in the 35 area on the RSI 5. There is already an open RSI 14 sell signal on the hourly chart.

ETHUSD daily chart:

On Solana I’ve been talking so far this week in the premarket videos about the likely small bull flag that was forming and has now reached target at the retest of the prior high at 152.36. That has set up a possible double top and a possible full daily RSI 5 sell signal is brewing there. If this divergence fixes into a daily RSI 5 sell signal then here are four previous daily sell signals, three of which reached the possible near miss target.

Solana is also testing the 200dma, currently at 154.69, and that’s holding so far. As with Bitcoin, this is a very obvious fail area.

SOLUSD daily chart:

On the Solana hourly chart there is a very nice looking possible double top setup, and on a sustained break below double top support at 141.18, the double top target range would be in the 128.43 to 130 area.

SOLUSD 60min chart:

This is a good quality short term high setup, on Solana and Bitcoin particularly, backed up with strong resistance levels and some negative divergence on the daily chart. it also matches a small double top setup on SPX that I was saying in my other premarket video today, might well be about to deliver. We’ll see how that goes.

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 Cryptos 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. 

In The Big Inflection Point on Crypto

A week ago I led with a chart looking at the strong correlation between SPX and BTCUSD (Bitcoin).I was talking about the big inflection point likely coming up on SPX, and SPX is in that inflection point now, at a stage where it could very much break either way, though the Fed gave bulls a big boost yesterday. Whichever way SPX breaks here, Crypto will likely follow to a significant degree.

On the Bitcoin daily chart, the daily middle band was backtested and held as support. BTCUSD has also broken back over the 50dma, and is close to a test of the 200dma currently at 63985. Bitcoin is looking a bit stretched at the moment, over the daily upper band currently at 62775, but still well short of the daily 3sd upper band currently at 65078.

BTCUSD daily chart:

I was looking at the possible IHS forming on Bitcoin in my post a week ago and, in the meantime, that finished forming, broke up, and has almost reached the IHS target in the 63750 area. I have drawn in a possible rising megaphone resistance trendline currently in the 64600 area and the key short term target for bulls is a higher high over the August high at 65.1k.

BTCUSD 60min chart:

On ETHUSD (Ethereum) a bear flag may well be forming and I have drawn in the three obvious trendline resistance options on the chart below. The first is a triangle resistance trendline and is being tested at the time of writing.

ETHUSD 60min chart:

SOLUSD (Solana) has been the strongest today, breaking up from the daily middle band to the upper band and the test of the 50dma. Short term upside looks limited with the daily 3sd now at 145.35, so if we are going to see a break back up into a test of the 200dma, currently at 154.22, then it will likely be a couple of days before that is attempted.

SOLUSD daily chart:

In the shorter term there is a high quality bear flag channel established on Solana, with flag resistance currently in the 143 area. I’m watching that level, and a break and conversion to support there would be bullish. A touch and fail there would be bearish.

SOLUSD 60min chart:

On the bigger picture, SPX and Crypto will likely either break up or fail hard together here. That decision is still being made. If it is a break down then the obvious downside targets on Ethereum and Solana are retests of the August lows at 2121.38 and 110.02 levels respectively to make possible second lows of large double bottoms before likely reversal higher. The target on Bitcoin is less clear as it has been the strongest of the three in recent months and a retest of the August low at 49.2k would both look harder, and would definitely not be the possible second low on a double bottom setup.

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 Cryptos 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. 

A Big Decision To Make Here

This is my first post on equities this month. My apologies for that. I’ve been getting my boys back to university. They have now both gone and summer has officially ended in my house.

In my last post I was looking at the bearish track record for Septembers in presidential election years, and we saw a sharp decline shortly after at the start of September.

I have still been doing my premarket videos every day as normal at my chartingthemarkets substack and, after that low was made I said there was a strong case for a retest of the all time highs on SPX and Dow next, at which point there would be a lovely topping setup on both, and a fail area inflection point that could deliver a big decline from there into October. Both of those all time highs have now been retested, and that really nice topping setup has formed. We are waiting for the decision on whether this will now break down within the setup or break up out of it.

On SPX there is a clear and very high quality nested double top setup. On a sustained break below smaller double top support at 5406.96, the double top target would be in the 5143 to 5162 range. Larger double top support is at 5119.26, and on a sustained break below there the double top target would be in the 4570-90 area.

In the short term an RSI 14 hourly sell signal has fixed. Five out of the last seven of these made target, with that target of course being in the 30-5 area on the hourly RSI 14.

SPX 60min chart:

On the daily chart there is no current negative divergence, and a retest from here today wouldn’t deliver that. Equities would need to go lower, hold that into the end of a day, then retest the high to deliver that.

Worth noting on this chart are the two trendlines on this very nice rising wedge. On a break up, the target would be rising wedge resistance, currently in the 5900 area. On a break down directly there is no support trendline as SPX will have been topping out after breaking down from the prior support trendline in late July.

I would note that this rising wedge came from the last big low in October 2023, and that a break down below 4600 would be well beyond the 61.8% retracement of that wedge at 4702. I’m wondering about a break below larger double top support at 5119.26, opening up possible normal retracement targets at the 38.2% fib retracement at 5072, or the standard 50% retracement at 4887. We have seen a lot of big lows in late October in recent years, and I’d be wondering about hitting one of those target areas in late October and making a big low there.

SPX daily BBs chart:

There is one other chart to look at on SPX here, and that is the weekly chart. On there an RSI 14 sell signal has fixed, and these often make target. Now the other thing you can see on this chart is the SPX is testing a possible resistance trendline on a much larger rising wedge from the 2020 low. 

If the trendline holds, then a backtest of rising wedge support from the 2020 low would have that trendline currently in the 4550 area, a good match with the larger double top target on SPX in the 4570-90 area. Either way there is solid backup for the obvious next targets on the daily chart. Food for thought.

SPX weekly chart:

On the Dow chart there is another nested double top setup, though not quite as perfectly formed as the corresponding one on SPX. On a sustained break below the smaller double top support at 40k, the smaller double top target would be in the 38.2k to 38.4k area. That would already take Dow below larger double top support at 38.5k, and a sustained break below that would look for a target in the 35.2k to 35.6k area.

INDU 60min chart:

On the daily chart I would note that the larger double top target is currently a match with rising support from the October 2022 low.

INDU daily BBs chart:

This is a big inflection point, and what happens next here will likely define the next few weeks, and very possibly the rest of the year. It will be very interesting to see what the Fed has to say today, and the effect that has on SPX and Dow both today and over the next few days.

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A Possible Path For Crypto into October

I’ve been having a good look at the longer term correlation between Crypto & equity indices and it is a strong one that has been impressively consistent over the last 8 years. The chart below just covers the last five years of SPX vs BTUSD (bitcoin) but you can see that the upswings and downswings tend to be correlated, and going back to 2016 the big highs on both are decently matched, with a strong tendency for Crypto to turn down before equities do.

I was asked a couple of weeks ago whether this might be happening again, with Crypto having topped a few months ago and SPX, NDX and Dow all looking as though a significant high might be close. I’ve looked at that and would say that it would be more typical for the two highs to be within a month of each other, though there is a possibly comparable period as BTCUSD was forming a bull flag for ten months or so in 2019-20 with the C wave down during the 2020 COVID crash.

This is a small sample though and when something has only happened once before, it is a bit early to be identifying a pattern. Maybe.

SPX vs BTCUSD weekly chart:

Could that happen here? Well yes. BTCUSD has been forming what is likely an overall bull flag since the new all time high was made in March 2024 and, if there is a larger decline on equity indices coming up soon, then there is a case that we will see some low retests then that would finish this bull flag setup.

Is there a case for a lower low on BTCUSD? Maybe, though the case for that looks stronger on both ETHUSD (Ethereum) and SOLUSD (Solana).

BTCUSD daily chart:

If so though, I have a theory about how that might look on SPX, with SPX and likely Dow retesting their all time highs in the next couple of weeks, leading into a larger retracement into October and, given that we have seen a lot of significant lows in Octobers over the last few years, perhaps a strong October low to finish the sequence? I was looking at that scenario on my The Bigger Picture video last night, and if you’d like to see that video, you can see it here.

How might that look on Bitcoin? Well, there is a possible IHS forming on that at the moment, and while that’s not a big pattern, it might be a decent match with that scenario on SPX & Dow, with a subsequent decline into a new bull flag low, possibly close to the 50% retracement level in the 44,360 area, before a new leg up on Crypto begins. In terms of the IHS, a sustained break over 58.6k would look for the 64.4k area.

I was talking about this on my Crypto premarket video this morning, and if you’d like to see that video , you can see it here.

BTUSD 60min chart:

The obvious reads here on Ethereum and Solana since March are also bull flags forming on the daily chart. Here is the one on Solana.

SOLUSD daily chart:

On the Solana hourly chart there is also a good quality possible IHS forming and, on a sustained break over 138, that would have a target in the 154/5 area. A decent rally, but there is still an obvious case for at least retesting the low at 110.02 to make the second low of a double bottom, so we might see that move after the IHS rally in sympathy with the decline on equity indices that may well happen then.

SOLUSD 60min chart:

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 Cryptos 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. 

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