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Swing Style For Bitcoin and Ethereum

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The violent swing trade in Amazon (AMZN) was enough to shake the teeth loose on most risk managers. We saw a $350 swing down from Wednesday to Thursday, followed by a full reversal on Friday after the earnings call.

But one trade that caught my eye this week was the calmness of the Crypto market. While it's never really calm in cryptoville, the charts were fairly smooth through the last ten days. Here is a chart of Bitcoin ($BTCUSD), swinging will the normal volatility of the crypto markets, but consistently trying to make higher lows coming out of the base. Thursday's intraday pullback to new 5-day lows surged to close near the high of the day while the Nasdaq was down 4%.

When we draw a relative strength line on the bottom of the Nasdaq chart, it helps us see this change in momentum better. This is done by comparing the Bitcoin price with the Nasdaq index, using a colon sign between them to get a relative strength ratio.

Doing the same thing with Ethereum ($ETHUSD), we can check to see if Ethereum is breaking out after months of underperforming.

When we widen that view out, we can see if there is any value there.

These trend line breaks of relative strength show when the crypto coin is outperforming the Nasdaq. It also helps show when crypto is trending higher on the price chart. Might be a worthy clue, as it looks like the crypto names are going to get another day in the sun.

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies


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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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