Very interesting last couple of weeks. The ceasefire had held pretty well and the S and P had made new highs trading 7385.02 despite global economic fears induced by the oil price. Crypto was broadly dragging higher with Dogecoin trading as high as 0.11706 USD and Bitcoin touching 82,850 USD. We’ve seen both come off their highs a bit as the ceasefire creaks and the USA and Iran exchange fire in the Straits of Hormuz and Iran renewing attacks on the UAE. The speculation was still very much that a deal is close and this is bringing positivity to risk assets, there is a feeling that with midterms coming in the USA and consumers suffering already from increased oil prices, the USA would like an off ramp to end the war.
As mentioned in my previous post, it was hard to see with the position the war was in how we would leg much lower in crypto and overall the down move was certainly a disappointment in that it would of been good to see a more pronounced move bring better buying opportunities. I called at the time that if I was flat I would be getting long and that has turned out to be a good call in the short term. In terms of exits, we can see on the chart below that the previous double bottom around 0.1170 served as the support that once it gave way led to a big leg lower. As we have rallied that has acted as resistance with Doge failing at that level in the last few days.
If I were flat going in to the war and had got long around 0.085 USD I would be looking to scale 40-50% out around 0.115 USD , it’s a decent profit and leaves us with some more on the table for the move higher or if we did trade right back down, then putting half back on. Looking at the chart below you can see we are at the low point for a long period, really with the positive outlook for a deal, if you can call it that, we should be looking to trade up towards 0.20 USD. Remember at the moment price action is very muted and volumes are thin, some speculate it is because of increased liquidity as banks and funds are much more involved in digital assets now but we’ve seen changes before and then seen these markets move aggressively again. Also worth remembering my point about flash crashes. I mentioned previously the value of having orders way off the market at key support levels and also that a price that prints during a flash crash will often see the market trend down after the recovery to trade that level. We saw it again in the flash crash below where after the immediate recovery the market trended down to print the price that traded in the flash crash.
To summarise for now, things are looking positive overall without much excitement in crypto recently, a deal is looking possible but there is always the possibility that things can escalate again. Recent CIA intelligence is showing the IRGC have possibly 70% of their missile stocks left which is a lot more than was widely thought a couple of weeks ago. The calls in my previous post have looked good so far and if you had a clip or two on around 0.085 the potential to scale some out is here.
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