Altcoin Market Bracing for Major Move - Bull Pennant?
The Altcoin market has been beaten down for months, a minor relief rally at the start of 2019 has been followed by a slow grind lower for all but a select few names.
Undoubtedly the Altcoin market is poised for a major move, the direction is unclear, but the compression in this market is undeniable.
Big Picture: Left Chart
- Currently sitting at the 50 period Monthly EMA, this area acted as support during the initial bubble burst of 2018, it may act as support again, however if it fails, then it sets the Altcoins up for a major fall.
- Currently in what appears to be a bull pennant (trend continuation pattern), this pattern is likely to resolve soon, likely within no more than 2 to 3 months.
Compression: Top Right and Bottom Right Charts
- The top chart shows the weekly timeframe and highlights the current bullish divergence between the momentum indicator and the price action, this does lend SOME strength to the bullish argument.
- The bottom chart looks at the 3 day timeframe, the highlighted regions depict the prior instances of market compression and the resulting moves, this also highlights the need for caution, as these periods of compression can break in EITHER direction.
The fundamental supply and demand dynamic of the halvening, inflows of institutional money and the current extremely beaten down Altcoin market would tilt the scales in favor of the bulls, however, should this pennant break to the downside, which i would classify as a decisive close below the lower trend line AND 2 closes below the 50 period monthly EMA, then the downside could be quite dramatic.
Undoubtedly the Altcoin market is poised for a major move, the direction is unclear, but the compression in this market is undeniable.
Big Picture: Left Chart
- Currently sitting at the 50 period Monthly EMA, this area acted as support during the initial bubble burst of 2018, it may act as support again, however if it fails, then it sets the Altcoins up for a major fall.
- Currently in what appears to be a bull pennant (trend continuation pattern), this pattern is likely to resolve soon, likely within no more than 2 to 3 months.
Compression: Top Right and Bottom Right Charts
- The top chart shows the weekly timeframe and highlights the current bullish divergence between the momentum indicator and the price action, this does lend SOME strength to the bullish argument.
- The bottom chart looks at the 3 day timeframe, the highlighted regions depict the prior instances of market compression and the resulting moves, this also highlights the need for caution, as these periods of compression can break in EITHER direction.
The fundamental supply and demand dynamic of the halvening, inflows of institutional money and the current extremely beaten down Altcoin market would tilt the scales in favor of the bulls, however, should this pennant break to the downside, which i would classify as a decisive close below the lower trend line AND 2 closes below the 50 period monthly EMA, then the downside could be quite dramatic.
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