Getting a fresh batch of monthly candlesticks has to be one of our favorite elements in our process.
Being forced to zoom out provides us with the insightful context of what truly matters -- the primary trend.
Remember, a lot of the work we do is simple trend identification. Instead of trying to catch the uncertain market top/bottom, we're always looking to position ourselves in the path of least resistance.
Trying to catch and time market extremes is difficult and it comes with a great deal of uncertainty.
Understanding market structure, on the other hand, will give you a great deal of conviction in your overall outlook.
We hate to sound like a broken record. But "patience" is the name of the game in a tape like this.
Looking at the asset class from the top down, it's clear we're still in the basing process. There is perhaps no better visualization of this dynamic than our broad-based altcoin index.
Incorporating just over 300 coins, this equally weighted index tracks all USDT spot pairs on Binance, adjusted for stablecoins, leveraged coins, and other outliers.
Over the last two weeks, we've made the case for short-term caution and patience. This approach has proven timely, with Bitcoin correcting 20% over this period.
As it currently stands, Bitcoin lies on a shelf of support near its most recent pivot lows, around the 18,000, 19,000 neighborhood.
Bearish sentiment seems to be approaching extreme levels, with both Ethereum and Bitcoin quarterlies trading backward.
At the same time, the macro backdrop continues to be a risk-off picture.
The S&P 500 has lost a key level of support, while the US dollar, interest rates, and crude oil all look prime to begin a new leg higher.
One of the big characteristics that often separates great traders from mediocre ones is the willingness and ability to sit on the sidelines when it's necessary.
A brief adage we often mention is the distinction between seeing a setup and looking for one. Be patient, prepare your perfect swing, and the setups will come to you.
There's lots of chatter about the Ethereum $ETH merge, and rightfully so.
It's a significant development for the entire space and is paving an ideological divide in the community from proponents of proof-of-work (PoW) to that of proof-of-stake (PoS).
But when it comes to our job as technicians -- that is, following money flow -- we like to sweep the narrative aside and see what's really happening.
Broadly speaking, risk assets have caught a well-received bid over the last few weeks. This recent period has proven to be an incredibly risk-on tape.
When it comes to crypto, the big narrative driving capital markets seems to be the upcoming Ethereum $ETH merge. This update will see the network move away from proof-of-work (PoW) to a proof-of-stake (PoS) framework.
Of course, as technicians, we naturally follow money flow as opposed to getting stuck in the weeds of narratives. It's quite clear to see traders are bidding Ethereum leading into the merge in what looks like a "buy the rumor, sells the news" event.
