July 8 Market Analysis – Brief Update

Trend Direction: Uncertain for now, but leaning toward the bearish side—just one step away from a confirmed bearish trend

Market Commentary

Tz̈i Zi and Hu Zi can’t sit still again. They’ve started using war expectations to interfere with financial and commodities markets once more. Oil jumped right on cue—so is this meant to set up another round of stubborn inflation-linked rate-hike expectations before the interest-rate decision meeting? I woke up and saw that many bloggers had begun to analyze the reasons for the chart’s decline, and they “found it”—the US-Iran war has been restarted! The bullish believers have turned bearish again—firmly!

In essence, these arguments make sense. But if every friend trading the market keeps making “after-the-fact” statements like this, then what’s the point of any analysis of the chart? Where is the certainty in trading?

Technical Analysis:

Let’s just talk for a moment—no more. Back to the chart. The 4H candlestick from 8 PM to midnight last night: both BTC and ETH pulled back to the MA30, and then formed a hammer-shaped candle with a relatively large real body. The pattern was so good that I started to doubt whether it was real or not. Especially when BTC, on the following 4H candle, pushed into the MA250—that aligned with my guess of an ideal pullback structure. So I decisively opened an ETH short position on the left side using a trend order, and the short-term short was also opened on the right side after the subsequent drop to around 1787. Unfortunately, before going to bed, my half-position protective stop at 1783 for the short-term position got hit and stopped out...

Even though the trend already has the beginnings of a downturn, I’m still maintaining my previous view. BTC’s key split level is around 62390, and ETH’s key split level is around 1748. If price breaks downward from here, I can’t rule out it being a false breakdown. Below, BTC and ETH each have support from a downward trendline (61730-61790, the red line in the chart) and from a supply zone (1722-1728, the yellow area in the chart). In other words, the bearish breakdown trend hasn’t been fully confirmed as a definite move yet.

However, from the perspective of moving averages, on the 4H timeframe, BTC has already effectively broken below the MA180—this is a solid bearish-trend signal. As for ETH, on the 12H timeframe it also effectively broke below the MA90. The only drawback is that ETH, within the 1722-1728 area, is supported a second time. This zone is also a confluence area: the 4H MA250 and the EMA50 are resonating there. Although reaching this area and bouncing is within expectations, if the price fails to effectively break below first, then whether the downside continuation can really extend remains slightly uncertain. Let’s see tonight whether BTC at 61730 and ETH at 1722 can “cleanly” break through!

Compared with yesterday’s uncertainty about the trend, today has a qualitative change: a formal shift to bearishness is essentially imminent. We can’t yet confirm that the decline will continue right now, but as mentioned above, once 61730 and 1722 are effectively broken, the downside channel will basically be established to extend further downward—this is already just one step away from that level.

To sum it up: as for today’s chart, as of the time of writing, it’s still not possible to say for sure whether bulls or bears are in control. You need to watch how price behaves around the key support levels. But the probability of a bearish trend has already gained the upper hand. Whether a further decline forms depends on how price behaves around the key areas during the night session. Taking ETH as an example: watch the break and hold behavior at 1722 and 1756. Price-action discussion is a bit complicated, so I won’t go into too much detail.

If 1722 is effectively broken, then the strong downside support in the near term is around 1660 (no more than $10 above or below). At that point, I personally would take full profit on my short-term position and take profit on half of my trend position. Unless something unexpected happens, even if 1660 isn’t the bottom of this round of decline, there should still be a fairly decent rebound. So my plan would be to take profits first and then look for another short on the rebound. Further down, keep an eye on 1605-1626 and 1573-1586.

One last thing—don’t listen too much to analysts who postpone the “news” part to give advice, or who declare that a big drop is starting just because the market has fallen by a few tens of dollars without a clear trend. Even though I’m still just a trading beginner learning the ropes, I really look down on analysts like that—and you could even say they mislead the public with their nonsense!