As a follow-up to last night’s post about gap-sealing, I wanted to turn our attention to the two big crypto charts and check in on the Animal Spirits.
After the dramatic failure at 1705 last Friday (arrow below), Ethereum and the whole crypto space went into a free-fall. Since that time, it has hammered out a perfectly-formed inverted H&S pattern. This, for the bulls, should be the most encouraging chart around, since it speaks to a meaningful push higher in the final week of 2022’s first half.
I would caution you, however, to look at the larger and more important Bitcoin chart. It, too, has been recovering, but just compare this chart to the one above. It is quite obviously much weaker than its smaller cousin. Yes, the prospect for a bullish base is absolutely intact, but Bitcoin is acting positively anemic compared to Ethereum.
One other bit of evidence to add to the many-things-are-weak soup, which is the fact that the /NQ futures sealed up its price gap last night and is starting to turn away. This could all be negated at the opening bell, but for the moment (I am typing this about an hour before the open), things still seem cautious.
