Carl Capolingua has been honing the dark technical analysis arts over some 30 years of investing, advising, and managing funds.

You might know him from such hits as ThinkMarkets and The Candlestick, where Capo plots the unknowable iterations of markets global, local and the very stocks within them. But today, he’s mucking about in cryptos.

Recently, just for fun, I scanned through top 130 cryptos by market cap. Chiliz (CHZ) and EOS were the clear standouts.

And after I actually tipped these in my spot on Ausbiz yesterday, they were the two best gainers in the top 100 overnight, so I’m pretty chuffed with that call.

You know what they say about a broken clock!

Let’s have a closer look at CHZ and the Big Two.

Bitcoin (BTCUSD)

Broken. Really, that’s the only way to describe the bitcoin chart.

The rally since the June low was a total dud, so the wipeout Friday was no real surprise. Maxis can meme it up all they want, but Bitcoin is broken.

Even the response in the candles since Friday’s long black marubozu is pathetic. This is what I call a “supply-side control pattern”. The supply side is in total control. They knock the market with what I call a supply even (i.e., Friday’s long, black candle with a close at or near the low of the session), then they wait for a demand-side response. There isn’t one… and or there’s enough supply around to cap any attempt by the demand side to stage a rally.

I would suggest it’s the first scenario (total lack of demand), but either way, once we crack the low of the initial supply candle (Friday’s candle), it’s lights out!

Bitcoin may prove me wrong (I doubt it) but I cannot see in this chart any scenario which doesn’t have Bitcoin falling further, most likely to retest the static demand zone between the 18 June and 30 June lows between 17585 and 18608.

Image: ThinkMarkets

View: Bearish, sell rallies to resistance zones until a close above 25366.

Ethereum (ETHUSD)

Ether’s chart is faring only marginally better than Bitcoin. I’d suggest it’s still in a supply-side control pattern commenced with Friday’s candle, but the demand-side response in the candles since is (dare I say?) somewhat encouraging.

White candles and lower shadows demonstrate some buy the dip activity, but not enough to restore my faith in the short-term trend. Friday’s candle sliced straight through my short-term trend ribbon which had been supporting the recent rally since mid-July. The fact we’ve closed below it on Saturday, Sunday and Monday’s candles is disappointing.

As much as I want Ethereum’s short-term rally to succeed, I must concede the long-term downtrend ribbon was just too great a supply-side hurdle to overcome. If we see a close below 1524, I’d expect the static support zone between 1281 and 1356 to be tested, and failing that, 880 to 996 is the next logical target.

For the optimists, the top of Friday’s supply event at 1848 is the key. It’s where the supply took over.

If Ethereum is to resume its short-term uptrend, the demand-side needs to deal with the supply which exists there. So, a close above 1848 is a minimum requirement before I could even think about adding to my Ether stack!

Image: ThinkMarkets

View: Neutral, bearish on a close below 1524.


Chiliz (CHZUSD)

Hands down the best chart in the Top 100. It’s doing all the stuff the rest will need to do to escape their long-term downtrends. Big ticks here: burst through its long-term downtrend ribbon, pulled back and tested it, then bounced strongly (Monday’s candle).

Add in higher peaks and troughs and great separation between the last trough and second-from-last peak (equals great price action). Volume shows a solid push to get it going again. Risk-reward looks reasonable with stops best set below the long-term trend ribbon and targets to the next major point of supply at 0.332.

Image: ThinkMarkets

View: Bullish, buy pullbacks to support zones until a close below the 10 August low of 0.141.

(Chiliz does fan tokens for some of the biggest European football teams… season’s just kicked off, so getting a bit of attention at the moment!)

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