Volatility Creates Opportunity
Another Up and Down Week
Preface
In another wild week for equities and crypto, the lack of stability brings about a much-needed cooldown. If you were feeling FOMO with BTC at 23-24k, this decline is a reminder to expect heavy pullbacks at any given moment and avoid chasing tops.
There will always be another chance to get in.
Latest Economic Data
Initial Jobless Claims
- 196K vs 190K consensus and 183K prior
- 1688K vs 1658K consensus and 1650K prior
There’s no surprises here and the numbers are so stable it must be nauseating for the Fed. An uptick in jobless claims and unemployment would serve evidence that their tightening policy has been taking hold.
For more on the employment picture, check out last issue:
Quick Takes
I don’t always care for the analysts and contributors at CNBC. In fact I take everything they say with a grain of salt. However, credit where credit is due and they sometimes have solid takes.
Steve’s on point with this comment. Interestingly if Powell wanted the stock market to drop significantly, he would be talking a lot more hawkish.
We still haven’t heard any explicit language about an extended timeline for rate hikes, but the Fed remains nimble and hasn’t completely ruled it out.
Then there’s this. Recessions usually start around the time when unemployment is at its lowest. One to keep in your back pocket.
And a very important thread from Brian Armstrong on why crypto innovation should not be stifled in the US. It’s in no one’s best interest at the end of the day.
Seasonality Events With Seasonax
My friends over at Seasonax have a new feature out, and it’s called Events. Now you can see how your favourite assets tend to perform around important economic events or holidays.
So far there are nearly 100 events, including central bank meetings, elections, and monthly/quarterly turns.
For example, I found out that the S&P500 stock market index tends to bottom out 4-6 days before Easter, and the week following this holiday is typically quite bullish. I tested this across a range of 10 to 30-year lookback periods to ensure consistency.
You know I love seasonal trends, so this has me pretty excited!
Technical Analysis Corner
BTC Daily Chart
Daily consolidation is underway for BTC, with the first support at 21.6k being tapped so far. We have a golden cross (50/200MA) in place, which acts like a magnet for price. Right now it’s in the 19.8-20.2k area. Then there’s cloud support in the 18.5-19.1 region.
The future bullish cloud twist bodes well for upside continuation once this consolidation is over. I still have 28-32k as a MTF target but we’ll have to take out 24262 first.
BTC 4H Chart
Previously I talked about the 22.3k channel support, which has now turned resistance. If you look at the volume profile, it’s easy to see why that happened. There is a lack of volume support in that area, which allows the price to move quickly.
We can identify the next high-volume node in the 20.7-21.4k range. There’s a decent chance it will be tested at some point. BPRO paints a moderate bullish divergence on this 4H candle so far. With RSI in the 20s, there’s reasonable chance of a bounce toward 22.3 from here.
ETH 4H Chart
ETH is at horizontal support here, and $1500 is key. A bounce toward $1600 resistance looks likely but losing $1500 brings the big red box into play.
SPY Daily Chart
The S&P500 is still dancing around this 410 level, but may be forming a daily bull flag. It should break out in the next few days, otherwise we’ll look for a higher low anywhere above 400. Next targets are the red lines above.
Jay Charles
Editor in Chief, The Trading Tank.
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