Intro
As we make our second step into Q2 of 2022 I will start sharing my weekly outlook on Medium as this format allows me to have a somewhat more detailed outlook on what I am seeing across markets.
Whilst reading this please keep in mind I am a (somewhat) decent swing trader and a failed scalper. I know what I’m good at so I stick to it. My charts and analysis focus on high timeframe data and I rarely go below the 4H timeframe.
I will share my charts, levels, and opinions with the goal of receiving criticism and opinions from others, so feel free to comment on anything you like.
This so-called essay will include a Bitcoin review, Ethereum review, general thoughts, and a shoutout to my sponsors, Drift Protocol.
Bitcoin
Monthly timeframe
As mentioned in last month's review I shared on Twitter, we had monthly support holding and consolidation on the monthly volume profile (mVP).
The monthly chart reached its first resistance painted between 44k-48k. It is showing clear weakness and has been rejected since. For anyone trying to even think of new all-time highs, this is the first level we need to clear to even bring up that thought.
The more important chart here is the mVP.
as I mentioned, a break of the mVP value areas and three-month consolidation shows major buying intent and would suggest continuation in direction of the break just like we had in July 2021.
A failed bullish setup is a good bearish setup.
The break happened and while we did have strong momentum, it appears we totally lost it once Luna Foundation and Saylor stopped buying.
The fact we are back within that mVP consolidation value area, especially after such ‘bullish’ news, shows that the market is very weak and should be treated as such until strength becomes apparent.
“What is strength?”
For me, strength would be Bitcoin getting bid up without any special ‘bullish’ news and also getting back above the value area of previous mVP consolidation.
Weekly timeframe
The weekly Bitcoin chart shows the supply area from the monthly chart much clearer. Bulls definitely have a lot of work to do to claim that area.
The range from lower timeframes which we broke out of with the help of Luna Foundation has its important boundaries at 44k and 38k.
A bullish setup might present itself if the weekly candle manages to reclaim 44k after a move towards liquidity sitting around 40k.
In my view, 44k-45k is the critical level to reclaim to be able to have a strong bullish view, if not, I will be looking to buy much lower as the market develops.
Caution though, I would not be surprised if we get to 45k and reject from there considering current weakness from markets.
Daily (3D for better viewing) timeframe
As we go to lower timeframes the range becomes much clearer.
If we only take into account the chart itself, we have a bullish market structure developing, with higher highs and higher lows.
I think it is important to keep in mind everything going on around, and not just the chart. So with LFG, Saylor, monetary policy, etc going on, I just reduce risk, but I still take bullish setups when presented.
I honestly believe that the 40k zone should not be lost if one is looking for longs. I am currently holding spot and as I was writing this article I also opened a small margin long. Invalidation would be a bearish close under 40k.
I think buying 40k zone and aiming for 45–52k with the proper risk management (considering all other factors) is a good setup as if we lose this area and can’t reclaim it swiftly I will probably aim to buy sub 30k or a strong reclaim.
Ethereum
Monthly timeframe
Ethereum's monthly view is pretty much the same as Bitcoin. It has bounced from support into resistance.
Nothing else to add.
Weekly timeframe
Personally, I think Ethereum looks much cleaner on higher timeframes as you have clear levels at which you want to do business at.
I have no interest in entering any swing positions in the dead zones between levels and will leave that to scalpers.
I would rather buy near 3k and aim for above 3.2k or sell after the 3k level is lost aiming for 2.2k.
I am long ETH atm and will cut if we lose 3k, looking to flip short if this weekly failure confirms itself.
Daily timeframe
As mentioned, Ethereum looks much cleaner than Bitcoin in my opinion.
The daily chart for me is very simple, as long as we’re above 3k it's all solid.
If we go below 3k, I think things can turn grim on Ethereum.
Many mention the merge as a bullish Ethereum narrative, however, you always need to remember that if Bitcoin does not paint an overall bullish or at the very least a calm picture, longing a beta of it is risky.
I love Ethereum and all it has to offer, but it is an altcoin and a Bitcoin beta no matter how you look at it. Always remember that.
Lose 3k and I won’t be interested until low 2k.
General thoughts
It is a personal choice if you let outside factors (such as LFG, Saylor, monetary policy, etc) affect your bias or not.
Many will avoid taking good setups, bullish or bearish, if outside factors are against their bias. Some don’t even look past the chart.
I can’t pinpoint my opinion on the matter, so what I do is simply control position sizing via those outside factors, but continue to trade the chart as much as I can.
For example, now, with all the bullish things happening but the price failing to continue its momentum, it is clearly not a good sign. Will I pass a bullish long setup? No. Will I size down as it's less likely to succeed? Yes.
I think it’s important to make sure you always adjust your system according to the situation going around you. The chart offers setups, you decide whether to take them and if you do, how big.
My Q2, Q3 and Q4 views remain generally bearish as I mentioned in my post at the beginning of January.
As @john_j_brown once shared something (not 100% sure it was worded exactly the same):
“when monetary supply increases by 5x it is only logical for assets traded against it to increase by the same amount if not more”
It only makes sense that a tightening of the same printers that caused the pump, to reverse its effect on assets traded against it, or at the very least slow it down.
With the economical situation all around the globe worsening, countries raising rates, money becoming more expensive to borrow, people's savings hitting lows each day, risk-on assets becoming less appetizing, it is hard to have a strongly bullish view for 2022 and 2023.
This does NOT mean I will not be longing assets, this just means I adjust my risk accordingly and don’t plan for long swing trades.
I think that most, if not all, are better off trading level to level, with no bearish nor bullish bias, for the next few months.
Not sure if this format will continue or if I will go back to Twitter threads.
But I hope you enjoy my moronic views.
