Alessio Rastani Features TheDowTheory.com: Update on the technical landscape for Bitcoin and Ethereum

 Alessio Rastani has a knack for making excellent and content-rich videos. As a follower of Alessio’s work for many years, I can attest that he tends to be on the right side of the markets most of the time. In his latest video, he delves into the current technical landscape of Bitcoin and Ethereum. I’m honored that he’s incorporated insights from my Dow Theory analysis and highlighted my work. Alessio identifies crucial price levels that must hold for the bullish trend to remain intact.

https://www.youtube.com/watch?v=E3W3EEcdwp8 

Sincerely,

Manuel Blay

Editor of thedowtheory.com

Warning: Bearish alert for Bitcoin and Ethereum

Dow Theory and basic trendline analysis tell us that trouble is brewing with Bitcoin.

In my April 1st, 2024 Crypto Report (available only to Subscribers), I wrote that “if Ethereum and Bitcoin jointly pierced the 3/20/23 lows, I would turn bearish”. ETHE decisively violated its 3/20/24 lows on 4/12/24 and continued lower for two days. On 4/16/24, BTC also broke down its 3/20/24 lows, confirming ETHE. I consider such a breakdown a bearish omen.

Some might argue that the pullback from the 3/13/24 (BTC) and 3/11/24 (ETHE) highs to the 3/20/24 lows did not meet the time requirement for a secondary reaction, and hence, the joint piercing of such lows was not so bearish. To get the setup for a bear market signal, we first need a secondary reaction, which must last at least ten trading days.

Given that cryptos are fast-paced and highly volatile, I tend to shorten the time requirement to consider the existence of a secondary reaction (which later may evolve into a Sell signal). Thus, the breakdown of the 3/20/24 lows was, at the very least, a warning sign.

If we insist on a secondary reaction lasting two weeks or more, even in such circumstances, both BTC and ETHE have completed a secondary reaction and the setup for a primary bear market in BTC and ETHE have been completed. Following the pullback lows (Step #2), a four-day bounce followed that completed the setup for a potential primary bear market signal (Step #3).

The table below gives you the relevant information:

 

 So, now the situation is as follows:

a) if BTC and ETHE jointly pierce their pullback lows (Step #2), a primary bear market will be signaled.

b) if BTC and ETHE jointly break topside their March highs (Step #1), the setup for a primary bear market and secondary reaction would be canceled.

The chart below helps you visualize the current situation. The brown rectangles show the secondary reaction that started after the March highs. The blue rectangles highlight the bounce (Step #3) that set up both Crytos for a potential primary bear market signal. The red horizontal lines highlight the 4/23/24 lows whose breakdown would signal a new primary bear market. The blue horizontal lines highlight the March highs whose breakup would cancel the secondary reaction and the setup for the bear market signal.

All in all, the April lows are vital. I would even add that the breakdown of the 3/20/23 lows was the first warning of a trend change. I am willing to accept a secondary reaction in the fast-paced crypto markets when the pullback/rally lasts less than two weeks. So, it is not outlandish to say that I have been “preliminarily” bearish since 4/17/24 when BTC pierced its 3/20/24 lows (and confirmed ETHE, which did so on 4/12/24). Looking forward, a breakdown of the 4/23/24 lows would be most bearish.

While not Dow Theory, the chart below is obvious and not bullish. A significant trendline has been broken, and the subsequent price action indicates a clear bearish trend, as prices struggle to move back above the trendline:

For the fundamental reasons I will explain in my next crypto report to Subscribers (due on May 1st), I am becoming bearish on Bitcoin, and the charts seem to confirm my bearishness. BTC is due for a breather.

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

 

Melt up: gold and silver soar, triggering a new Dow Theory bull market signal on 4/2/24

 SIL and GDX are also in a Bull market since 4/3/24

Overview: On 4/3/24, SLV finally surpassed its 12/1/23 closing high at 23.33 and confirmed GLD, which had breached its 12/27/23 highs on 3/1/24. So, now, according to the Dow Theory, a primary bull market in gold and silver has been signaled.

Today, 4/3/24, SIL and GDX also triggered a new primary bull market signal by breaking above their 12/27/23 closing highs. In the next few days, I will write more about SIL and GDX.

General Remarks:

In this post, I extensively elaborate on the rationale behind employing two alternative definitions to evaluate secondary reactions.

GLD refers to the SPDR® Gold Shares (NYSEArca: GLD®). More information about GLD can be found HERE.

SLV refers to the iShares Silver Trust (NYSEArca: SLV®). More information about SLV can be found HERE.

A) Market situation if one appraises secondary reactions not bound by the three weeks and 1/3 retracement dogma.  

As I explained in this post, the primary trend was signaled as bearish on 2/13/24.

Following the 2/13/24 lows, a strong rally ensued with no meaningful pullback. Accordingly, the relevant highs to be surpassed were the 12/1/23 closing highs for SIL at 23.33 and 12/27/23 for GDX at 192.59. On 3/1/24, GLD broke above such highs without SIL confirming. On 4/2/24, SIL confirmed signaling a primary bull market.

Check out the chart below for a visual walkthrough of the recent price action. The blue rectangles indicate the rally that began after the lows on 2/13/24. The small grey rectangles represent a pullback that failed to meet the criteria for triggering an ordinary buy signal in both ETFs. In the absence of this setup, the highs of the previous bull market become the relevant highs to surpass.

Thus, both the primary and secondary trends are currently bullish.

B) Market situation if one sticks to the traditional interpretation demanding more than three weeks and 1/3 confirmed retracement to declare a secondary reaction.

As I explained HERE, the primary trend was signaled as bearish on 6/21/23.

In this post, I explained that the setup for a potential primary bull market signal had been completed.

On 12/27/23, GLD surpassed its 12/12/23 bounce high, which was unconfirmed by SLV. On 4/2/24, SLV surpassed its 12/1/24 highs, providing confirmation, and thus, a primary bull market has been signaled.

The table below contains all the details:

The charts below show the most recent price action. The blue rectangles display the secondary reaction against the bear market (Step #2 in the above table). The brown rectangles highlight the pullback that set up both ETFs for a potential primary bull market signal (Step #3). The blue horizontal lines show the relevant price levels to be jointly surpassed for a primary bull market signal. The red lines indicate the 10/5/23 primary bear market’s last lows, whose violation would signal a new primary bear market (very unlikely at this juncture).

 Sincerely,

Manuel Blay

Editor of thedowtheory.com