IN THIS ISSUE
- Solana summer has arrived
- Ethereum & Bitcoin momentum slows into weekly resistance
- The USD Index threatens breakout to the upside
- DeFi & Altcoins are heating up
Solana summer has arrived! Unless you’ve been living under a rock this week, you’ve no doubt caught wind of the new all-time highs that SOL put in this week. After confirming a breakout from the recent downtrend, SOL bulls wasted no time taking the #1 Ethereum competitor to new highs. Solana is the first high-cap to break previous yearly highs in the wake of the 3-month “bear market”.
As you’d expect, everything Solana pumped right alongside it with FIDA outperforming the pack, sweeping all-time highs last night as well. The quick rise in price, left a lot of would-be bulls, waiting in the wings for the dip. It’s been incredible to watch, and as someone who’s been DCA’ing a Solana focused Sam basket for the last couple of months, I’ve been enjoying the show.
The Delta-Fi panel has been beating the drum on SBF and SOL throughout the year, and naturally, we’re all very pleased with ourselves (and our bags) this week as the market demonstrated without a doubt that there is a ton of interest in what’s being built in the Solana ecosystem.
So what’s next? Where can we find value as traders and investors going forward?
I covered all the Solana based projects that I could find on Hxro Labs LIVE yesterday. It’s a long episode so if you didn’t catch it live and don’t have time to watch it in its entirety, the TLDR is that it’s Pump Chaser Zone (PCZ) season.
These kinds of pumps are exactly what the PCZ was made for. It can be tempting to chase price up in the heat of the moment. But as a trader, I need to remind myself that it’s more important to follow my plan than it is to chase gains on any given day. Depending on how well-positioned I am, I can wait for the PCZ pull back on a 4hr or daily timeframe. If I’m completely sidelined in stables, I may look to get a bit more aggressive and hunt for my initial entry on a 1hr PCZ tag.
Regardless of how I do it, I know that my top priority this year is to continue adding exposure to my SBF/SOL positions over the coming weeks and months. The tech, funding, dev community, staying power, and overall risk/reward profile of these projects is still, in my opinion, the best in the market.
We’ll continue to chart and discuss this sector at length on our livestreams throughout the year!
As this is happening, Bitcoin and Ethereum are both losing steam up against weekly resistance which is helping me stave off my growing FOMO in the market. If they roll over in the near future, all the tokens I’m looking to accumulate should provide me with a strong entry at lower prices in the coming days and weeks. I welcome the opportunity.
The Fear & Greed index is heating up this month, now sitting at 72 on the day (Greed). It was a fast turnaround in market sentiment which one would expect given the velocity and scope of the rise in prices across the board since putting in lows in mid-late July.
@DaanCrypto put out a chart on Twitter that mirrors the market psychology phases that I discussed recently on stream. All evidence I’m seeing points towards a disbelief rally taking place right now. Defined by a cautiously optimistic crowd who is quick to flip bear, take profits and run for the exit. This is normal given the circumstances but is important to identify so that I can master my own behavior through this phase of the market cycle.
I need to manage my expectations (and emotions) so that I don’t get caught offside on the move that comes next. Just like I didn’t think it was likely that we’d go full bear without coming up to test some key weekly resistance levels, I think it’s unlikely that we’ll flip back to full bull without first testing some recently gained support levels.
When those levels come in (assuming they do), I need to check myself. Make sure I don’t get caught up in the disbelief of the crowds that will inevitably lead to me reducing my exposure when I should be hunting fresh entries in PCZ’s and/or local Reload Zones (RLZ’s).
To do that, I need to have dry powder available, so I did do some profit-taking this week on a few of the bags that I’d been accumulating throughout July. If we reclaim weekly resistance levels above without a pullback, I can re-deploy, but otherwise, I’ve set myself up to welcome the “final shakeout” as I see it, and play from a position of strength for the remainder of the year.
As a potential echo to the sector-wide Solana rally, I’m watching ATOM and AVAX names as well in the event that either of those two coins breaks out this month. If they go, I can catch the wave by picking up tokens built on those platforms.
If you haven’t yet, check out the tags on the CoinGecko website. Clicking them takes you to a curated list of projects that are associated with your desired ecosystem. It’s a great way to play the sector rallies, which are my favorite way to trade this market.
Solana (SOL): https://www.coingecko.com/en/categories/solana-ecosystem
Cosmos (ATOM) – https://www.coingecko.com/en/categories/cosmos-ecosystem
Avalanche (AVAX) – https://www.coingecko.com/en/categories/avalanche-ecosystem
Bitcoin reached the Gann 50/50 target 29 days faster than I’d originally anticipated based on his vibrational signature theory of an asset taking back half of a move in half the time. A pleasant surprise indeed. As expected, the bears are making a stand here at weekly resistance and will do everything they can to prevent price from going up any higher.
It’s going to be a battle, and the most likely outcome in my opinion whether we’re in for a bull or bear market through the end of the year is that we’ll visit the Pump Chaser Zone down in the low 40k region before the war is won.
Ethereum is looking very similar on the USD chart. Momentum waning at resistance and looks ready to search for buyers back down at weekly support in the mid-high 2k region. This would ultimately lead to a healthier chart and provide ETH bulls with a stronger base from which to launch their next offensive. It’s not written in stone, but the probability of searching for fresh demand down there sometime in the coming weeks is fairly high.
Having a plan for both outcomes (breakout above resistance or test freshly minted support) is the optimal approach from here. I’m not rushing to sell all my bags in anticipation of a move lower, nor am I loading up all my dry powder and holding blindly. Light on our feet, and ready to trade whatever the market gives us. That is the way. Managing risk and our emotions along the way.
The ETH/BTC pair broke out from an HTF flag formation and has now formed another one just above the previous trendline resistance. Retesting said trendline would take price into the local PCZ and provide Ethereum bulls an opportunity to swap more of their BTC over to ETH.
With over 58,000 ETH being burned in just the first ~2 weeks since EIP-1559 was implemented. One has to think the price action on this pair will resolve bullishly sometime in the near future.
You can watch Ethereum burn in real-time, here: https://ethburned.info/
Bitcoin may have an opportunity to hit back with the coming Taproot upgrade in November. That narrative has yet to show itself on socials but it’s one I’ll be watching for through early Q4. Until that time, I expect Ethereum will continue to gain ground on the King.
The USD Index is threatening to break higher again this week which could help the bears in the coming weeks. There is no guarantee that a breakout will be the harbinger of a prolonged bear market, but it would no doubt make headlines and shock the market into a short-mid term pull back. As with all market analyst tools, it’s just one part of a broader analysis that should be considered when looking at the high time frame picture.
The DeFi Perp is moving up with strength and just confirmed a higher high on the weekly after close out the week above $10,000. In my mind, this confirms that we’ll witness a move higher sometime in not-so-distant future, but as with Bitcoin & Ethereum, it’s not out of the question to get a bullish retest of daily support before continuing upwards. If we lose $10,000, the $8,200 level will be the next area of interest for the bulls.
With everything I’m seeing in the market this month, a bullish continuation to new highs is the most probable outcome for the remainder of the year. That could take us up into Chaos PRZ levels as high as 20k & 30k+ by EOY. It would be incredible to witness and be reminiscent of the strong continuation we saw in 2017 after an episode of summer doldrums very similar to the what we just experienced in July.
The total Altcoin Marketcap has reclaimed the 20-week moving average after a gut-wrenching 11-week drawdown. As you can see from back in 2017, the market experienced a somewhat similar fear cycle mid-summer and went on to make incredible gains in the months that followed.
History doesn’t always repeat, but it often rhymes. If we get the bullish continuation, expect to see the Altcoin market cap eclipse 2 Trillion and make a push for 3 Trillion to round out the year.
I’ll continue to keep you updated on the state of the market each week! Until next time, have a great week, and whatever you do, always play from a position of strength!
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The following commentary is provided for informational purposes only and may not represent the views of Hxro Games Ltd. or its affiliates, and should not be viewed as legal, tax, investment, financial or other advice. Digital asset transactions are inherently risky, and you are fully and solely responsible for evaluating your purchasing decisions at your own risk. Past performance is not indicative of future results.
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