The big pie has been quite weak this weekend. Yesterday, the low long zone of 11.50 to 11.48w was fine, but the bounce was too slow. From 11.50 to 11.52w, this 200-point range actually took all night to move?! Woke up in the morning and made a 500-point run.
Looking at the latest CME expectations for a rate cut in September, it’s currently only at 75%. It feels like the market is indeed pricing this expectation in. (The more certain it is about a rate cut, like 90+, the more it prices above 11.70. The less certain, like this week's lowest at 65%, the more it prices towards 11.2w. Currently, at 75%, it is priced at 11.5W. Roughly estimating it like this.)
Currently, there are 24 days left until the September FOMC meeting, and there are a series of important data releases in between, such as next Friday's PCE, the following week's non-farm/unemployment rate, and the next week's CPI/PPI. Each data release will undergo intense speculation before and after it is released. So the next three weeks should be quite volatile until the September shoe drops.
The big pie has maintained the previous large range over the past three weeks. Currently, the on-chain big pie is at the two largest cost ranges below the current price, with the upper range being the 11.7x pressure zone of 1000 points mentioned throughout the week, and the lower range being the support zone of 10.8 to 11.2w. These two major cost points form a pressure support range.
If the upcoming data does not need (or should not) lead to an immediate interest rate cut, for example, if non-farm payrolls are significantly better than expected or CPI continues to rise sharply, then if the CME's probability of rate cuts continues to drop below 65%, wait for the big pie to test the lower range of 10.8 to 11.2w. As long as it doesn't break here, the bulls will still have a chance.
On the contrary, if the data develops in a way that allows for interest rate cuts, for example, if non-farm payrolls are weak but not collapsing, and CPI is moderate (even if it remains unchanged), as the probability of a rate cut in September approaches over 90%, it will continue to test the 11.7x pressure zone. It may even stabilize and rush towards 12W+.
So at this point in time, there is no need to predict the trend. Just wait for the weekly data updates. Who knows, the big pie may continue to play in a liquidity-less small range. Will Ethereum continue to jump up and down?
Back to today, it’s again time to wait for the CME opening at midnight on Sunday or early Monday.
The current order has reached a state where both the upper and lower parts are very empty. Even the contract market is very convergent. Large funds also do not want to bet here now.
The thought now is that going long at this weak market on the weekend is still a bit dangerous.
The previous low of 11.45 to 11.46 should have a weak bounce. But it’s already close to the price (current price 11.47w) in the afternoon, so I’m not very inclined to trade.
In the past three days, liquidity has accumulated between 11.45 and 11.40. The hollow zone is at 11.40.
Should we consider the storyline of inserting liquidity tonight? Set near 11.40w. At 11.40w, there are 1) the hollow zone for inserting liquidity, 2) the breaker block that couldn't break through on Thursday, and 3) there’s a dense trading area from Tuesday to Thursday between 11.35 and 11.40.
Therefore, if you can get low long positions in the 11.40 to 11.35w range, the cost-effectiveness is very high. (If you can't get in and it shakes up at 11.45, then just adapt to the market.)
The only thing is that it’s hard to determine the exit point, as there are various support areas below, turnover areas, 30-day RVWAP areas, on-chain cost areas. So 1) as long as the news doesn’t turn bad, hold on until it breaks below 11.15 before exiting. 2) Or be stricter and take a 500-1000 point loss; if it breaks 11.30, then exit. If you lose and turn around, just accept it; the goal is not to hold the position.
Although the pressure zone is at 11.7x W, given the weak market conditions, even if it tries to push up, it may need to rush away around 11.65w. At 11.65W, there is a concentrated area of chips (stuck) after Powell's speech, plus the breaker block from the three probes. As long as the sentiment in the US stock market is not particularly strong, it can be considered.
Of course, the exit point still needs to be above 11.80.
