- Michael Boutros is a 15-year professional FX trader and technical strategist at DailyFX.
- He breaks down why bitcoin could surge to $45,000 soon before pulling back to $32,000 to $35,000.
- He also lays out parallel trades for ethereum and two altcoins as he predicts similar price moves.
Make no mistake, Michael Boutros is a trader through and through.
Having worked for almost every major foreign exchange broker on Wall Street over the past 15 years, he has tested and refined his own technical-based trading strategies down to a tee.
“The part I love the most about trading is it’s not static, every day is a new setup, every day is a new opportunity,” Boutros said in an interview. “It keeps you on your feet, and the market always provides.”
Since the fast and furious market crash of March 2020, volatility has gradually edged lower in traditional markets, but the trader in Boutros always knows that “there is opportunity everywhere, you just need to know where to look.”
“It might not be an investor’s market, but it’s always a trader’s market,” he said, “and that’s the way I approach every day.”
With the flexibility and agility to capitalize on fluctuations in near-term prices, it comes as no surprise that traders like Boutros are drawn to the highly volatile crypto market.
Even better, as the bitcoin-dominated asset class matures, traders with technical analysis expertise are particularly suited to gain an edge.
“Technical analysis is just the study of crowd psychology, so the more participants you have in an asset, the clearer the technicals are,” Boutros said. “With bitcoin, it’s more of a sheer sentiment play, which is why from a technical standpoint, as more investors come into the fold and more volume in this asset begins to unfold, the technicals become more and more clear.”
Bitcoin to surge, decline, and break out to new highs
After dropping below a key support level of $30,000 on July 19, bitcoin (BTC) has staged a strong advance off of multi-month lows. It was trading at above $42,000 as of midday Friday.
Boutros thinks traders should not get too excited for now. He discerns a similar price trajectory for bitcoin as the path it undertook in the summer of 2018.
“If you take a parallel with the price action that we saw from the decline in 2018, there are actually a lot of similarities both in price and in time,” he said. “In that specific decline, you saw that about the fourth or fifth month in a little bit of a neat recovery that gave way to another multi-month decline.”
In his view, bitcoin is in that transition period between near-term recovery and prolonged slide again. He adds that the largest cryptocurrency could rally towards $45,000 before running into a major downtrend resistance, which could lead to another multi-month decline.
“I don’t think we will necessarily see new lows, but on the downside, if we reach $32,000 to $35,000, that would be possibly decent entries for the long side,” he said. “On this advance, with the reversal we just made, even if it extends into $45,000 from here, you still have to be wary. It’s still a broad multi-month downtrend.”
By January next year, Boutros sees bitcoin break out above the $45,000 level and surge towards fresh new highs.
“So if you are not a near-term guy, you want to sit this out,” he said. “You want to either wait for the pullback to $35,000 to buy or if it maxes above $45,000, that’s going to be the resumptive trade, you are likely to see an accelerated rally.”
For traders looking to exploit short-term price moves, the next couple of weeks are prime time.
“You are looking for a high to fade, so you want to look for a stretch near $43,000 to short,” he said. “If it gets even higher, maybe add on $45,000. But that’s your threshold and it really shouldn’t be anything higher than that if we are going to correct lower.”
Trading strategies for ethereum, litecoin, and ripple
While much of the crypto market moves in tandem with bitcoin, some tokens have performed better while others have plunged harder than the dominating crypto, which was up over 47% year-to-date as of midday Friday.
The native token of ethereum, which activated a hotly-anticipated London upgrade on Thursday, was up 280% this year. For Boutros, $3,300 is the line in the sand for ether (ETH) to mark the resumption of another uptrend.
“You will probably see ether continue higher over the next few days, but into $3,300 or $3,350, you want to start to tidy things up early,” he said. “You are hitting a lot of uptrend resistance there, so close out some long positioning and raise your protective stops.”
On the other hand, litecoin (LTC), which was up about 15% this year, is in the process of making a longer-term bottom before resuming a potential strong uptrend, according to Boutros. The altcoin was trading at just above $148 as of midday Friday.
“Litecoin has had a pretty precipitous drop. It’s kind of bottomed out pretty nicely over the last two months,” he said. “I’m looking for a pivot and a close above $150 to possibly be the resumptive move there.”
Boutros thinks that ripple (XRP) is in a similar bottoming process, but if it does clear above $0.80, then it will likely find meaningful support. The altcoin, which was up about 248% this year, was trading at $0.74 as of midday Friday.
In the near term, it’s the same trade for bitcoin, ether, litecoin, and ripple in that even if they spike higher in the short term, traders should wait for the pullback, according to Boutros.
“It’s too clean for this 10-day rally to just pause for two days and then continue,” he said. “There’s got to be a washout. We need to wash out some of the weak hands first and then all of a sudden that low is where you want to start building up for a larger rally.”