Entertaining Another Capitulation Event

From the Desk of Louis Sykes @haumicharts

As technical analysts, we pride ourselves on never being dogmatic in our approach.

Always being open to a variety of scenarios will always be a virtue for market analysts and traders who put money to work. We constantly play devil's advocate, questioning whether elements of our macro thesis hold up to criticism.

An integral part of this objective approach is to have a predetermined list of data points that would invalidate our initial models and theses.

In the case of the current market environment, we're of the view that if Bitcoin's holding its prior cycle highs of 18,000 and the S&P 500 is defending its June lows, we don't want to be looking for short opportunities.

Instead, we're better served either focusing on names shaping up as potential long candidates while remaining patient until a more defined directional bias can be ascertained.

But what if we take the other side of this discussion?

What if Bitcoin loses 18,000?

What if there's more pain ahead?

How will we adapt?

With a variety of risk markets pressing to the lower bounds of current trading ranges, this is certainly a real possibility we need to factor into our outlook.

So, let's play this thought experiment and see how we'd modify our approach.