Wednesday June 15, 6:45 AM
Yesterday featured a nearly 15% spike downward for both ETH and BTC. This was imteresting on a few levels
- Price for both ETH and BTC recovered back to near their highs within a very short time — a few hours.
- Prices for both ETH and BTC moved in the same direction. This has been true for the last several days as both have shot up in price. You might recall they were moving in a more inverse correlation for weeks prior to this recent rise.
- Volume was at it’s highest yesterday after 2 huge volume days already in this move
- BTC closed slightly red while ETH closed.green both well above the bottom of the huge candle showing the spike low created on a price chart
What to make of this volatile move? Intuitively this would seem quite bullish as price needed a pullback to reset some overbought yndicators and they needed to chase out some weak hands before moving much higher. I saw more comments expressing this sort of view on various sites than any other, and there’s no question this is a possibility.
I think the higher probability is that this move is a signal that we are nearing the top of this move for both ETH and BTC and will likely see more downside soon. Here’s why:
Indicators move based on price and TIME. There was definitely enough price fluctuation to reset indicators on short term time frames, but when you look at that move over a day or a week, it’s not significant. It barely moved most of the indicators I follow.
In addition, this move does little to alter the patterns as it basically went right back into the range of price from the day before.
So indicators are still overbought but now we’ve seen a sign of weakness with a large move down. I’ll be watching for more red flags. It’s also possible this spike was simply a large sale/repurchase by a single investor – These markets are not that large where they are beyond that sort of manipulation – very few markets are.
So with all this information in mind, how did this dramatic spike effect my positions?
Not at all — I did not buy or sell anything — still at 40% of core position. As I said in a prior post, there’s currently no edge to the up or downside and my target remains around $20 for this move (moderate probability).
Time is still right to watch for new patterns to emerge.
One final note — The DAO seemed to drop and not recover as well as ETH. I’ll be keeping an eye on this to see if these two currencies continue to diverge.