After yet another wild weekend of cryptocurrency movement, itâ€™s possible to identify levels of danger for investors and for traders. Most trade-able assets take Saturday and Sunday off but not bitcoin and friends. The cryptos like to find new price levels or re-visit old ones, up or down, depending on the weekend.
This time around, itâ€™s the old levels that attract attention. If youâ€™re a investor, for example, of Bitcoin, then youâ€™re probably of the â€œHODLâ€� persuasion. That is, â€œhold on for dear lifeâ€� whatever the short term moves may be. For these types of buyers, the only thing that counts is the long-term, thought to be heavenly or close.
Those who think of themselves as traders have a different perspective: volatility is good because it provides opportunities to get in and get out, over and over. Rally, sell-off, rally, sell-off â€” a trader is looking for buy spots and sell spots based on certain types of discipline.
For the long-term view generally taken by those who call themselves investors, hereâ€™s the monthly Bitcoin price chart:
The breakout above the 20,000 level of late 2017 is clear. The extraordinary move up to 42,000 by early 2021 is clear. You can see how Bitcoin quickly sold off by about 20% after hitting that high. Itâ€™s odd to see the lower level of volume now as compared to the late 2017/early 2018 period.
Hereâ€™s the weekly Bitcoin chart:
The trading range is between that 42,000 high and the subsequent quick and massive sell-off to the 30,000 level. The straight-up quality of this chart is unusually strong following the break above 2018â€™s high of about 14,000. Once that level was taken out, a lot of folks hit the buy button again and again for weeks.
Bitcoinâ€™s daily chart looks like this:
The red dotted lines indicate possible support levels if the selling continues. Thatâ€™s the area between 28,000 and 30,000. A break below that would indicate something more severe. The moving average convergence/divergence indicator (MACD) below the price chart suggests exhaustion, at least for the short-term.
Hereâ€™s the Ethereum monthly:
The January movement upward is quite dramatic and it would mirror the Bitcoin monthly chart except for one thing. Ethereum so far is failing to break out above its late 2017 peak. If you look at this chart and compare it to Bitcoinâ€™s youâ€™ll see the difference. Will significant resistance remain present at just above 14,000? Weâ€™ll see.
Ethereumâ€™s weekly price chart:
The range from the 1350 high to the 900 low is quite large when you consider that itâ€™s just 2 weeks worth of movement. A break above or below might more clearly indicate the strength or weakness of this cryptocurrencyâ€™s up trend.
The daily price chart for Ethereum looks like this:
Take a look at the way selling volume expanded yesterday. The support level at about 915 is where traders will be making difficult decisions â€” if itâ€™s breached. The moving average convergence/divergence indicator (MACD) does not look all that encouraging. All of that could change quickly â€” nothingâ€™s guaranteed.
I do not hold positions in these investments.Â No recommendations are made one way or the other.Â Â If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.