Alt Season or Salt season? Techncial Levels to Keep on Your Chart
Market bottoms rarely look pretty. In fact, they never do. In this issue we discuss the latest technical levels for a number of altcoins and what one could reasonably expect in the not-too-distant future.
Let’s dig in.
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The purpose of this newsletter is to provide context to cryptocurrency markets. This analysis takes time to write-up and it’s released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent. I am also working on keeping my wording simple and to the point. Please bear with me.
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The Altcoin market
Ethereum is showing strength against Bitcoin. The ETH/USD pair held $4,000 and has printed several bullish signals which historically infer that altcoins are primed to rally.
Currently, ETH/USD upside is capped by $4,875, with the daily super-trend having flipped to a ‘sell’ on Nov.18. Typically, the first test of this high time-frame indicator does not result in an immediate flip of the S/R level. Still, ETH/USD has created a ‘W’ pattern on the daily and medium time-frames (4-hour), which could result in an all-time high retest. A daily close above the level open the door to acceleration to $6,000.
On the flip side, the 20-weekly EMA lies at $3,633. provided Bitcoin doesn’t fall off a cliff and tank the entire market, this is a ‘buy the dip opportunity’, where investors will likely deploy chunks of capital.
All in all, Ethereum — like Bitcoin — is showing signs of macro accumulation. If ETH/USD leads the market (showing persistent relative strength against BTC/USD), then altcoins are likely to benefit from typical capital flows. Lending protocols like Aave and Compound tend to do well in this situation.
Ethereum is at a -12% from all time highs at the time of writing.
Litecoin retests breakout structure
LTC/USD has retested the technical breakout structure and currently trades at $211.
Since it bottomed on July 21st, Litecoin has been on a roller-coaster ride with a series of higher (local) highs and higher lows. Though volatile, the trend has been up and to the right.
The 200-daily EMA has acted as a consequential pivot for the coin since before the bull-market began, as you can see above (blue line).
This makes the levels of interest relatively simple.
- Daily close above $248 suggests all time highs.
- $200 is strong support until proven otherwise.
- Lose $200 and $186 should be the bottom (assuming bull market continuation).
In the early days, BTC/USD traded just like LTC/USD trades today — extreme volatility — but ultimately up and to the right. With a clear adoption curve, Litecoin is probably going through a similar trajectory, but is currently a cycle behind Bitcoin in terms of adoption.
Litecoin is at a 30% discount form the local high at the time of writing.
Compound Breaks Down into a Range?
In the last analysis, I said that a break of the COMP/USD trend could unlock a cascade of selling pressure, and if that didn’t happen then the crypto is likely ranging.
Suffice it to say, that did not happen, lending credence to the idea that COMP/USD is in a range.
COMP/USD is at range lows ($274) on declining volumes and could gyrate at the lows for some time until majors dictate what’s next. After being rejected from the pivot, the pair formed a falling wedge structure that tends to break up more often than not. The target is $514.
In the event that the ‘cascade sell-off’ materialises, my guess is that it would be a fake-out followed by a swift reversal. In this scenario, any weakness to reclaim $274 would be a red flag, however. A persistently bearish posture could mean something else is going on.
DYDX/USD is facing a similar technical picture as Compound.
The exchange token bounced just below $12.5 and appears to have set a local bottom for the time being. A high-time frame retest of the level is possible, and a reclaim of $17.6 would open the door to $20 and new all time highs.
If bulls fail to hold the floor, expect a brief visit to single-digit territory before a bounce.
The Ample opportunity
This chart needs no introduction for those in the telegram group.
Ampleforth has formed a macro trading range, which might be due to its unique tokenomics (unique doesn’t mean good).
Deviations below $0.63 are buying opportunities, while deviations above $1.63 are selling opportunities.
Two narratives are currently at odds with one another (who would have thought right?) — one were the market experiences a blow-off top by the end of Q4 2021, and another where the cycle extends into 2022. While crypto could have already topped (i.e. bear market time), this is the least likely possibility in my estimation. Bear in mind, the global turmoil we are witnessing right now, where things don’t add up is no mere coincidence — this is the first chapter of the last book that defined an age (speaking figuratively it’s not the apocalypse. Life goes on). This is the great monetary renegotiation of our time.
My view that this correction won’t last longer than the end of November still stands in light of various on-chain data sets discussed in previous mailouts. December — January should be interesting months, especially if the market respects the same moving averages it did in 2017 on its way to $5 trillion-plus in market cap.
Catch you later.
p.s. This is my opinion. It is not financial advice.
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