Deep down, many investors suspect that they should own some crypto assets.
But doing so comes with some seriously crazy volatility – just like we’ve seen these past weeks.
Buy it at the wrong time and you could blow a big hole in your investment.
In previous “crypto winters,” Bitcoin alone lost around 75% in just 12 months. That is enough for many to simply avoid the sector altogether.
That’s why I revealed my bitcoin skimming strategy last Wednesday. As I’ve shared there, you can “skim” profits like $4,898 from bitcoin without buying and holding it – or worrying about the next time it’s going to plunge. To catch up on all the details, make sure to watch the replay right here before it goes offline.
And today, I’d like to show you another way to play the latest bout of volatility in the crypto markets.
One way is through crypto miners like Marathon Digital Holdings (MARA)…
Repeating Signals
The 50-day Moving Average (MA, blue line) in MARA’s chart below shows its steady rise in the first half of last year.
That up move culminated with MARA rallying strongly into the mid-year before hitting its short-term peak on July 14:
Marathon Digital Holdings (MARA)
Source: e-Signal
As the chart shows, MARA’s peak and reversal in July coincided with several common bearish signals:
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The Relative Strength Index (RSI) made a clear reversal in momentum from overbought territory (upper grey dashed line). MARA’s fall gathered pace with the RSI tracking down to oversold territory (lower grey dashed line).
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The MACD line (blue) crossed below the signal line (orange). This indicates a bearish change of direction. The MACD continued to track lower below the zero line (0.00), where it remained as MARA fell.
MARA flattened out through October. But the opposite set of signals enabled MARA to begin its climb in November.
From that promising start, a surge in buying momentum caused MARA to rally strongly into December.
You can gauge the size of that up move by the rate at which the 10-day MA accelerated above the 50-day MA. It was a much bigger move compared to MARA’s rally back in July.
The other telling signal is how thoroughly the RSI breached the overbought line. MARA’s RSI rose even further in overbought territory than before.
But a repeat of those same bearish signals from before caused MARA to reverse and fall.
And now the RSI is tracking sideways below support (green line).
The two MAs have recently crossed over, with the 10-day slipping under the 50-day MA.
So what can we expect from here?
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Holding Support
After its fall earlier this month, MARA has recently started to flatten out. This has enabled it to build short-term support (orange line).
So what happens immediately around this level will be key.
Take another look:
Marathon Digital Holdings (MARA)
Source: e-Signal
If MARA can hold support and we see a resurgence in the RSI, then that could set MARA up for a bounce.
The RSI breaking up through resistance (green line) could soon see MARA retesting $20.
The other thing to watch is the MACD. Both lines are currently tracking lower. Yet they could reverse quickly.
The blue MACD line turning higher and crossing above the orange signal line (with the signal line also turning higher) will add further weight to any emerging up move.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
Mailbag
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