ARKK Trading Inside Value Area

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The ARKK ETF skyrocketed from pandemic 2020 lows of 33.00 all the way to all-time highs in early 2021 of 159.70. It has since traded all the way back to those 2020 price levels. However, if you are a supporter of the ARKK ETF, then now could be a good time to enter for long term investors. Why? Let us look at the weekly chart dating back to the inception of this fund in 2014. You can see the largest volume profile ledge was established between 46.35 and 35.35. This, in my opinion, is a key value area for this ETF. A doji candle with a long lower shadow also formed on the weekly chart signaling a potential loss of downward momentum. As far as upside resistance, the first major zone appears between 60.50 and 76.57. This zone contains a volume profile ledge, the 34 EMA wave, a symmetrical Fib retracement, and the 50 WMA. There are a couple of ways to play this ETF.

You could enter inside this 46.35-35.33 zone with a percentage risk-based stop. You would just enter inside this value area and look to ride out its volatility over a longer-term horizon (5+ years).

Or you could enter inside this 46.35-35.33 zone with a tight stop below the VP ledge around 31.50. You would then look to scale out somewhere inside the first resistance zone between 60.50 and 76.57 while moving a trailing stop on the remainder of your position to break even. If prices were able to break above resistance, then the next resistance target comes into play around 110.75.

For more information on ARKK, you can visit https://etfdb.com/etf/ARKK/#etf-ticker-profile.

Are Cryptocurrencies Building a Base to Head Higher? Or Will They Continue Lower?

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Are Cryptocurrencies building a base to head higher? Or will they continue lower?

Today I will analyze my favorite Cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), and Solana (SOL). All 3 markets are currently in bearish downtrends on both weekly and daily timeframes and the most recent swing down from late March highs has been swift. However, I am noticing one interesting thing about all three. If you look at each of these markets’ daily charts from the late March highs until the recent May lows, you will notice the largest volume profile ledge is happening now. What comes next will be important. If prices can hold here and rally, then this ledge could provide support if it gets retested. However, if prices break recent lows and continue lower, then this area will could be resistance on any future rallies. Stay tuned!

Bitcoin (BTC)
Ethereum (ETH)
Solana (SOL)

Copper Pullback Offers Long Set-up

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Last week I wrote an article about Copper, which you can check out at Barchart.com. I was interested to see if Copper could break out above some overhead price and volume resistance. It did last Wednesday with a big upside move triggering a bullish ABCD pattern with targets at 4.6925, 4.798, and 4.888. This pattern fails below 4.3135. Now I would like to follow-up on that article because Copper has since sold off the last two days into possible support. First, let’s talk a bit more about the bullish set-up. The ABCD pattern is bullish because its retracement is 50% or less. It also has positive momentum because the skewing is 7 bars down, 4 bars up. Normally, it’s a good idea to look for pullback entries in these cases. My favorite support zones are based on volume profile, Fib clusters, 34 EMA waves, Fib symmetry, and support/resistance lines. For Copper, we have a volume profile zone (blue box on daily chart), a Fib cluster (green box on daily chart), Fib symmetry (4.416), and an upwards sloping trend line. This area can provide a low risk/high reward entry. Stops should be placed below 4.3135. The one thing I don’t like about this set-up on the daily chart is the OBV indicator. It does not show increasing volume with this latest upwards move. But I still believe this pattern can hold and hit target 1.

XLF Support Zone

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XLF has had a great run since bottoming out in March of 2020. It has rallied over 112% since that time. Now there’s a large support zone approaching on the daily chart between 39.20 and 37.91 and on the weekly chart between 38.21 and 35.90. These two zones overlap to create a third zone between 38.21 and 37.91. All three present good opportunities to get long this ETF. What’s in these zones? All contain volume profile clusters, change of polarity (old resistance becoming new support), 34 EMA wave, monthly pivots, and Fib symmetry. Now for the trade.

Aggressive entries would be at the top of the zone on the daily chart. Moderate entries would be in the overlapped zones on the daily and weekly charts. Conservative entries would be in the middle of the zone on the weekly chart.

Stay tuned for more details.

Daily Chart
Weekly Chart

Cotton Going Parabolic?

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Have you seen this latest article at CNBC about Cotton prices? It’s an interesting read. Now that we know some of the fundamental concerns, let us look at the charts. Usually, price action likes to stick relatively close to its 34 EMA. Until it runs too far away from it and goes parabolic. That’s what happened in late 2010 into early 2011. Also notice how violent prices fell back down once the run-up ran its course. Lesson: be careful chasing these types of moves.

Weekly chart

Now that we have reviewed previous history, let’s move on to the now. The weekly chart shows an ABCD pattern with shallow retracement, which signals a strong trend. However, the left-handed skewing (4 weeks to 27 weeks) that triggered it showed a lack of upside momentum. But that all changed in late September with this recent surge higher. The two big questions now become: how high can prices go? and is it too late to be a buyer? Let’s tackle the first question. The weekly ABCD pattern suggests a minimum upside target of 124.37 to 125.50, which is its 100% projection and 261% extension. Above that is a weekly consolidation zone between 142.29 and 168.49 that occurred on the run down from its 2011 peak. This zone also contains the weekly ABCD’s 361% and 461% extensions.

Weekly chart

Now that we have some upside targets available let us move on to the second question. Are we too late to enter? My favorite tools to use for pullback entries are volume profile clusters, the 34 EMA wave, Fib symmetry retracements, and change of polarity areas (old resistance becomes new support). The volume profile clusters show zones around 105.90 to 103.30, and 99.90 to 97.40. The 34 EMA wave currently sits around 100.06 to 97.16, but will change as price action moves. Fib symmetry retracements occur at 108.72, 106.59, and 98.00. Finally, change of polarity comes in from 96.71 to 95.60. Putting all of these areas together, I like the 100.06 to 95.60 zone for a potential buy. However, it’s likely that with a sudden upwards burst like we’ve seen that we won’t get a pullback of this nature. Therefore, the other zone to watch closely will be between 106.59 and 103.33.

Daily Chart

Two last things worth mentioning are COT positions and seasonality. First, large traders are currently long at 192 week extremes and commercials are currently short at 238 week extremes. Be mindful as this can become an overcrowded trade quickly. Second, Cotton tends to see late October into late November weakness (possibly giving us our buy entry) before a surge higher that can last into late January to mid March.

Seasonality

Just remember, trading moves like this isn’t for the feint of heart. This market’s ATR has doubled over the past couple weeks. Be prepared for continued volatility ahead.