Finding Opportunities in a Choppy Market

Louis Sykes
September 27, 2021

Still pretty choppy out there, eh?

There's some clear demand at 40,000, with buyers continuing to defend this floor.

We've been vocal that this has the characteristics of a bear trap as on-chain accumulation heats up, sentiment is in the dumps, and prices are at a logical level to dig in and find support, which is what is taking place.

But in that same breath, we've also been anticipating choppy action in the near term as this demand gradually absorbs all this overhead supply. There's nothing wrong with waiting for a higher conviction entry back above the 46,000-47,000 resistance band knowing that things are well on their way higher. It all comes down to your timeframe and market plan.

Otherwise, if we break below 40,000, all bets are off, and the bias is lower back to 30,000.

It's also worth paying to traditional markets.

Particularly in the last few weeks, Bitcoin has traded closely with the broader market.

With new highs in yields and a potential rotation back into cyclicals on the board, it's hard to imagine that's a negative backdrop for risk assets - Bitcoin included (Bitcoin's a risk asset, too).

Back to crypto, this choppy action can really be seen in Ethereum, which has been undercutting this critical 2,900 level for the last week.

The same applies to Solana, which has been dead money since hitting one of our many upside objectives a few weeks ago.

There's too much opportunity cost at stake below 182. We only really want to own it above there, otherwise we leave it alone.

And as for the broader crypto market, the altcoins are in the process of consolidating their gains relative to Bitcoin (as seen in the lower pane).

We'd like this relative trend higher that's been intact off the July lows to continue higher to signify risk-seeking behavior on the part of investors.

But this doesn't mean to say that all altcoins are suffering.

In fact, there's been some notable standouts in recent weeks.

The first of which has to be Avalanche, which we covered in-depth last week.

Remaining aggressively long above 60 continues to be the strategy here.

There's so many names that look like AVAX right now, so keep your eyes on these few names in the coming weeks:

If Bitcoin can find a bottom here, it'll be hard to imagine that the names reclaiming their first-half highs won't be the leaders when this selling pressure subsides.

Speaking of our crypto "bear trap" thesis, XDC Network looks to potentially forming what we in the business call a "bull hook."

Above 14 cents, and we can be long XDC with a target of those former highs near 0.1950.

This one's a tactical trade for those looking shorter-term.

The new decentralized derivative exchange dYdX just popped higher out of its ICO base - not a bad look at all.

We can either buy strength above 23 with a target of 30, or buy weakness toward 18 and trade that 18-23 range. Either way, not many names have gained so much traction like dYdX in this choppy market, so this relative strength has been impressive.

Because even in a messy market, there's almost bound to be opportunities - they're just more difficult to come by.

Just look at Celer Network, which just popped onto our radar in the last few days. This only reiterates our view of the importance of looking at names that have overcome their first-half highs or have resolved to all-time highs. That's where the relative strength lies.

You can download this week's leadership scan by clicking here.

Or you can download the Excel formatted file here.

We've sorted the names by their performance since the 6th of September, which marked Bitcoin's local top, and also scanned our universe for their change since their first-half highs, the performance off the July lows, and whether they've outperformed Bitcoin over this period.

Let us know if you have any questions at all.

Allstarcharts Team.

 

Filed Under