How low can we go?
So here we are in the middle of June 2022, after months of downside. Are we any closer to finding the bottom?
Let’s have a look at some areas of interest.
What is the Scenario
After our last update, I did recommend that there was a low risk entry to buy in with a tight stop loss to mitigate any losses. With the bearish key news out of the US FOMC meeting and CPI data we saw that price did indeed fall to the downside.
From the perspective of a price action trader, understanding previous structure is key when trying to determine that buyers will overtake sellers.
In the previous cycle, we saw this similar behavior in the image above. During the bear market of 2018-19 we saw price fall back to a previous flag/pennant where price had previously consolidated before tracking higher.
If you don’t know much about price action trading this is all you need to know – Previous Resistance (red candles) will act as support if price breaks higher and returns to test it.
Bulls
Applying the above logic to the current shows us that we could spend some time consolidating at the current level, before seeing any real commitment from the market. A good start here would be a close on the weekly chart above this green orderblock.
Bears
Conversely, the inability to keep buyers interested at these levels could result in a weekly close either inside or below the above green orderblock. This would start to give us an idea that we can start to feast our eyes on the bottom zone. Which would take us to $10-12k USD.
Macro Landscape
Key Data
Looking at this year alone, we still have four more times the US Fed will get together to commit their efforts to try and tackle inflation.
A few commentators in the space are calling for a lot of the selling pressure to now be baked into current pricing, and that the downside could be exhausting.
This is all speculation still in my eyes. Some kind of early proxy that we could be seeing some more favorable on-risk conditions starting to come online would be seeing some weakness in Crude Oil. Oil has been on a tear, and a good indicator of inflation, getting closer to those 2008 levels ($147.2/barrel in July 2008. Vs. $130.5/barrel in May 2022.)
What do I think
To point out the obvious, we are week-on-week getting closer to a potential bottom. However, picking the bottom or top in any market is never a realistic objective.
What we are seeing now, I believe, is a great opportunity to finally have enough reasons to start deploying funds and dollar cost averaging (DCA) into the market. With fear at all time highs, arguably those are the best times to start investing.
Bitcoin is really the only asset I could recommend accumulating over the next few months, it should at least make the majority of your DCA.
I’ve personally started accumulating BTC (98%) and a tiny bit of SOL (2%).