Major Crypto Rally Imminent? | Altcoin Mentors Strategy Notes for the Week of May 20
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Last week, I noted that my first major downside target was $7900. Two days ago, we saw a local bottom at $7920 and a rally up to $8400. Unfortunately, this rally was not clearly impulsive and still leaves my second target of $7500 on the table.
That said, while additional downside is possible, I re-iterate that this is the first high probability buying opportunity that we have seen since the correction started earlier this year. If you are following us in Telegram, you’ve seen that we have been been actively buying for the past few weeks. We jumped the gun a bit and are slightly more underwater than we wanted to be, but overall are very happy with our current positioning.
You can see in the chart below that there is significant bullish divergence between the price and technicals. This is a sign of the bears becoming exhausted. There can be one more low tolerated, but not much more than that. A significant bounce should ensue.
Zooming out a bit, make note of the green and red price levels. These are the key pivots. If a bounce can take us above $9130 in 5 waves, the next major pivot is between $14200 and $15700.
However, if the price breaks strongly below $7100, that tells us that the early April low of $6400 is likely to break as well, which will signal additional downside to the $4800 to $3100 region. I will be exiting half of my positions for a loss if we see $7100 broken, and the rest under $6400.
Taking a look at the Ichimoku Cloud and Moving Averages on the daily timeframe, note that the price is still in the cloud, with lots of potential resistance overhead until $9100. This lines up nicely with the above chart’s pivot of $9130.
A significant break below the cloud will serve as an early warning of additional downside.
I will end with this quote from Jesse Livermore, one of the greatest traders of all time:
“It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!… Men who can both be right and sit tight are uncommon.”
If my read on the market is correct, this will become very prescient. Once the crypto market starts trending, you want to ride those positions until the wheels fall off. Your psychology will want you to take small profits and big losses, but you must not give into this instinct.
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Happy trading!
Charlie You
Altcoin Mentors, Inc.
twitter.com/iamcharlieyou
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