A popular trader known for staying steadily bearish throughout 2022 says the latest rallies mean nothing and another leg down is imminent.
Pseudonymous trader Capo tells his 703,000 Twitter followers that his bearish outlook hasn’t been invalidated by the market’s big bounce, which has seen Bitcoin (BTC) rally 21%, Ethereum (ETH) 23% and many altcoins explode 30% or more in the past seven days.
According to Capo, BTC is still unsuccessful in breaking its most critical resistance around the $21,000 to $22,000 area.
“Market is bouncing more than expected. That is a certainty. Now… is the bearish scenario invalidated?
I’m going to explain why I think new lows are still likely…
BTC is still testing major resistance. Weekly close will be key, but there’s no bullish confirmation yet.”
Capo says that similar resistance is present in the charts of Ethereum, the total crypto market cap (TOTAL) and the total altcoin market cap (OTHERS). He doubles down on bearish price targets for all instruments, including $600 for ETH.
“This is also clear on ETH, TOTAL and OTHERS.”
The trading veteran also sees weakness in the stock market, which has mostly held a directional correlation with cryptocurrencies over the past several years. He says that the S&P 500 is forming repetitive lower highs and predicts that this quarter’s earning season doesn’t turn out so well for most big companies listed in the index.
“Traditional markets downtrend is intact too. SPX keeps forming lower highs all the time and earning session is expected to be bad.”
Capo’s chart suggests about a 22% drop in the S&P 500, which closed on Friday at 3,999 points.