"Jiangfeng Trading Diary" Issue 8: Candlestick Charts and Indicators are the Result of Prices, Not the Cause of Prices!
Today I will explain clearly why I am always worried about a significant plunge in the market. In yesterday's seventh article, I mentioned that Bitcoin is not suitable for shorting at the current price. Following that, the price rebounded from around 62500 to the current 64350. The short positions of 63800–64200–64600 have already been entered, and for Ethereum at 1860–1880–1907, it only rebounded to around 1855 and did not provide an entry opportunity. However, there is no rush; just focus on today's opinion and continue to lay out short positions! The specific entry and exit points are included in the text, so please read patiently!
First, regarding today's opinion: continue to prefer high shorts during the rebound! Risk index 🌟🌟🌟☆☆
BTC: Resistance above at around 64400–65400–66200, support below at: around 63300–61800–60800 and the 60000 level–58200!
ETH: Resistance above at (1875–1895)–1935–1968, support below at: around 1820–1730–1680 and 1540–1440!
Finally, let me talk about my trading logic: currently, several major factors in the fundamentals are negative
1. Although recent CPI data for June shows inflation has slightly receded, the hawkish voices within the Federal Reserve continue to strengthen. Fed Chair Waller has clearly stated, "The Federal Reserve has no intention of backing the cryptocurrency sector"; if stablecoins explode, don’t expect the central bank to step in for assistance. Fed Governor Logan directly stated, "We should raise interest rates to combat inflation," and Vice Chair Jefferson also mentioned that if inflation doesn’t cool down in the short term, they will reconsider their policy stance.
2. Maintaining interest rates in July has basically been set in stone, and the favorable conditions have largely been priced in. However, the risk of a rate hike in September has not diminished, with the CME predicting a 51.2% chance of a 25 basis point increase and a 6.6% chance of a 50 basis point increase, which will suppress upward price movement in the short term!
3. The geopolitical situation between the U.S. and Iran is escalating, launching a new round of airstrikes against Iran, and risks in the Strait of Hormuz are rising. This will also push oil prices higher; Brent crude has risen over 4%, approaching $88.1. The increase in oil prices raises inflation expectations further, reinforcing the reasons for the Fed to raise interest rates. Bitcoin, as a risk asset, is the first to be affected in global risk-averse sentiment.
4. The legislative progress of the U.S. CLARITY Act is not meeting expectations, as the latest text of the bill has not been released for a long time. On Polymarket, the probability of the bill passing has fallen to a historical low of 31%. The market is worried that the text might be delayed until next week. With the August recess approaching, there’s urgency to push it forward. Meanwhile, Binance has not obtained an EU operating license, and the end of the MiCA transition period has raised compliance pressures in the industry.
5. ETF fund outflows are not sustainable. Although there has been a slow influx in the past two days, there was a net outflow of $425 million on July 13, with Fidelity FBTC seeing outflows of $246 million and BlackRock IBIT seeing outflows of $186 million. The total net outflow of ETFs in June reached $4.06 billion, the largest monthly redemption in history.
6. Layer 2 networks (such as Base, Arbitrum, etc.) continue to siphon trades from the main chain, resulting in reduced fee income and a weakened token burn mechanism. The significant upgrade "Glamsterdam" has been postponed to the latter half of Q3, and there is a lack of catalysts from the network layer in the short term. Options traders are heavily positioning for downward protection, and market sentiment towards ETH is increasingly pessimistic.
Given these combined negative factors, there are no signs of a quick reversal in the short term. The FOMC meeting on July 28-29 is the next key juncture—before that, the market will likely maintain a weak pattern under this pressure. Therefore, I personally will lean towards shorting on rallies. To be honest, the space for long positions is quite limited, so I recommend cautious participation in longs!
There’s no need to elaborate further on the technical indicators; the upper strategy's short entry points are basically the pressure levels for this time, so you can take that into consideration. However, in actual operations, I still hope everyone can have their independent judgment and not blindly follow the crowd in their operations!
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