Tight as a Tiger

Louis Sykes
August 30, 2021

It's sure getting tight out there...

There's an old adage that from compression comes expansion.

We saw this exact development take place a month ago before Bitcoin's face ripper of a rally.

Here's why this "compression" is important to pay attention to:

As markets become more coiled, buyers or sellers are ultimately forced to front up. This period of shrinking volatility is often met with violent unwinds – in either direction.

So when we see these periods of notable reductions in volatility, pay attention because the resolution often sets the tone for weeks and months to come.

Fast forward to today, we're seeing the same setup take place.

Ethereum's Bollinger Bandwidth is at its lowest in over a year, and Bitcoin isn't too far off either:

The resolution from this tight range will likely set the tone for the coming weeks, if not months.

As we outlined in Friday's call, there are two potential patterns developing in Ethereum right now: a bull market continuation or a near-term distributive top:

Of course, we're still making the bet that this consolidation, and others we're seeing out there, will eventually resolve to the upside.

But if Bitcoin loses 46,000 and Ethereum closes below 2,900, that'll be our signal to raise some cash in anticipation of near-term volatility.

It's been pretty clear that despite this chop and churn in recent weeks, that there have been a handful of names that have marched on higher.

Our recent darling, Solana, has to be the best example of that right now:

Congrats to all those who have been riding this one higher.

Solana has been an incredible standout in the last few months, nearly achieving our second upside target in a matter of days...

The Sandbox has also suddenly popped onto our radar following this impressive breakout to all-time highs.

The Sandbox is a growing NFT-based video gaming platform where users can make their own 3D games.

We couldn't help but think it sounded eerily similar to Axie Infinity, another NFT gaming platform, which we've discussed countless times the last few weeks.

With NFT marketplace volume reaching a whopping $2B this month, will SAND catch up to AXS in the coming weeks and months?

If that breakout at 0.90 can hold, we can certainly make that argument.

And how about this tight consolidation in Waves?

If the major coins resolve higher from their respective consolidations, it's hard to imagine Waves won't follow suit.

Above 28, and we're owners of WAVES with a target of the former first-half highs of 42.

For a deeper look into how leadership is faring up, be sure to download this week's leadership scan down below:

Click here to download this week's scan.

That's all for today's note.

There's not too much to update on, as we patiently wait for the market to make a move.

Be sure to fire us a line if you have any questions at all.

Allstarcharts Team

 

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