We Nailed The Weakness. Soon The Strength.

Jan 24, 2024

IN TODAY’S REPORT

What we cover: STATS EDITION. Ethereum looks poised to close lower for 5 straight days.

TODAY’S STATS

After Bitcoin Weakness, Look for Ethereum Strength

In our last report, we analyzed several warning signs for Bitcoin after the long-awaited spot ETF approvals, concluding with the following admonition:

“While we’d love for these short-term warning signs to amount to nothing but misplaced concern, you’ve been notified. We may get a chance to see Bitcoin below $40k very soon.” —“Warning Signs For Bitcoin” REKTelligence Report 1/17/24

While Bitcoin now pushes back above 40,000 as we write, we’ve just come off two consecutive closes below the 40k whole round number. While we nailed the weakness, we’ve now got compelling stats for Ethereum, the number two crypto currently poised to closer lower for five straight sessions.

`ETHEREUM (ETH/USD). Daily Chart with 50ma, 100ma, & Likely 5 Straight Lower Closes.`

First, let’s define current conditions. Our three setup conditions are simple:

QUERY SETUP CONDITIONS:

CONDITION 1: Ether closes lower for 5 straight days
CONDITION 2: Ether closes above its rising 50ma
CONDITION 3: Ether closes below its 50ma


ENTRY AND EXIT CONDITIONS:

1. ENTRY CONDITION: Enter long ("buy") at the open of the next daily candle
2. EXIT CONDITION: Exit ("sell") N-days later

The results for Ether’s current setup are impressive.

`ETHEREUM (ETH/USD). Average Trade Comparison, Current Conditions vs “Buy and Hold”`

Looking at hypothetical average trade results, the current (probable) conditions have historically produced positive outcomes across the board.

Average short-term trade results for the current setup have returned 26.6% and 67.0% using 30-day and 60-day hold times respectively. Over intermediate-term hold times from 90 days to 12 months, average trade results return a minimum of +70.6% ranging all the way up to +390.5%.

From a risk-based perspective, there’s nearly zero losses using any hold times from 30 days through 6 months, with a worst trade result of -32.6% using a 365-day hold. Coupled with extremely high winning percentages nearly across the board, the setup becomes even more attractive.

The upshot? Whether Ethereum produces similar average trade outcomes or not going forward, holding ETH right now appears to offer dramatically lower than average risk. The case for ETH strength from here looks about as rock solid as they come.

peace_love_crypto

-DB

IMPORTANT DISCLAIMER

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