End of Q2: When Fear Increases...
We closed last week with a sell-off following the US bombing attempt in the Iran-Israel conflict. Although we saw a dip on Sunday due to rumors of the Strait of Hormuz closing, this didn't fully reflect reality, and yesterday we witnessed ceasefire agreements. In a period where fear had escalated so much, I believed the decline was over and took a long position. I think the coming days are critical.
Although Monday saw a manipulated increase, it was followed by another sell-off. The rest of the week was dominated by selling, and the range-bound movement continued. While the double top formation on BTC doesn't look very promising, it's worth remembering that during a similarly critical time in the 2021 bull run, it continued its rally even after confirming a Head and Shoulders (H&S) pattern. The possibility of a similar situation should be considered.
Last week, I mentioned that while I expected a new ATH, I was hesitant due to the anticipated risks. With yesterday's weekly open, the price made a nice move by pushing back above the monthly open. I will be hesitant to take short positions as long as the price does not trade below the $103.5k region. Being the last week of Q2, I'm torn between thinking it could be either very volatile or very calm. I will likely avoid taking many trades until I see more decisive movements. This week's implied volatility range is between $86k and $115k.
While DVOL continues to decline, the ratio of put contracts in the month-end options has further increased, with the Put/Call Ratio reaching 0.72 and the max pain level now at $102k. This Friday, BTC contracts worth $14.8 billion will expire.
After an unsuccessful move towards $2700, ETH experienced a pullback all the way to $2100. The price structure, which was stuck around the $2500 level, remained very weak against BTC and suffered a sharp sell-off.
It broke down through that "wicky" structure on the weekly chart with intense selling. However, yesterday it recovered quickly along with BTC and re-entered that range. The weekly implied volatility is in the $1780-$2670 range. Since it still hasn't fully regained its strength, I'm keeping my focus on BTC.
The rise in DVOL has paused; in fact, there's a decline. While bullish positioning continues, the market sentiment remains bullish for this week, although the P/C Ratio for month-end contracts has slightly increased to 0.52. The Max Pain Price is at $2200, the area where it has been stuck for several weeks.
The structure of lower highs and higher lows has broken to the downside. However, it currently appears to have found support at the 0.022 region, which I have been mentioning for a long time. Since I expect sharp movements when we see a rise from here, it would be logical to include ETH in long positions. However, for a more significant position, it might be better to wait for a sustained hold above 0.026; otherwise, the trend is still downwards.
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