Bitcoin and Ethereum – Weekly Technical Analysis – February 22nd, 2021

Bitcoin and Ethereum – Weekly Technical Analysis – February 22nd, 2021

Steering clear of the first major support level at $41,134, Bitcoin rallied to a Sunday intraweek high and a new swing hi $58,321.2.

Bitcoin broke through the first major resistance level at $57,109 and the second major resistance level at $57,109.

Falling short of $60,000 levels, however, Bitcoin eased back to end the week at sub-$57,000 levels.

The pullback saw Bitcoin fall briefly fall back through the second major resistance level at $57,109.

4 days in the green that included an 8.34% rally on Friday delivered the upside for the week.

For the week ahead

Bitcoin would need to avoid a fall through the $53,809 pivot to support a run the first major resistance level at $61,888.

Support from the broader market would be needed for Bitcoin to break out from 21st February’s new swing hi $58,321.2.

Barring an extended crypto rally, the first major resistance level would likely cap any upside.

In the event of an extended breakout, Bitcoin could test resistance at $65,000 before any pullback. The second major resistance level sits at $66,400.

Failure to avoid a fall through the $53,809 pivot would bring the first major support level at $49,297 into play.

Barring an extended sell-off, Bitcoin should steer clear of sub-$45,000 levels and the second major support level at $41,219. The 23.6% FIB of $45,501 should limit the downside.

At the time of writing, Bitcoin was down by 1.31% to $56,625.0. A mixed start to the week saw Bitcoin rise to an early Monday high $57,449.0 before falling to a low $56,000.0.

Bitcoin left the major support and resistance levels untested at the start of the week.

Here’s how multi-leg options allow traders to profit from $2K Ethereum price

This week Ether (ETH) price finally broke through the $2,000 level as aggressive institutional inflow through Grayscale Investments products and declining exchange reserves signaled that buying pressure was increasing.

While many traders are skilled at using perpetual futures and the basic margin investing tools available on most exchanges, they may be unaware of additional instruments that can be used to maximize their gains. One simple way, albeit expensive, is buying Ether call option contracts.

Ether 60-day historical volatility. Source: TradingView

For example, a March 26 call option with a $1,760 strike trades at $340. In the current situation, the holder would only profit if Ether trades above $2,180 in 39 days, a 21% gain from the current $1,800. If Ether remains flat at $1,800, this trader will lose $300. This is certainly not an excellent risk-reward profile.

By using call (buy) options and puts (sell), a trader can create strategies to reduce this cost and improve the potential gains. They can be used in bullish and bearish circumstances and most exchanges offer easily accessible options platforms now.

The suggested bullish strategy consists of selling a $2,240 put to create positive exposure to Ether while simultaneously selling a $2,880 call to reduce gains above that level. These trades were modelled from Ether price at $1,800.

Two out-of-the-money (small odds) positions are needed to protect from the possible price crashes below 20% or Ether gains above 130%. Those additional trades will give the trader peace of mind while also reducing the margin (collateral) requirements.

Profit / Loss estimate. Source: Deribit Position Builder

The above trade consists of selling 1 Ether contract of the March 26 put option with a $2,240 strike while selling another 1 Ether contract of the $2,880 strike. The additional trades also avoid the unexpected scenarios for the same expiry date.

The trader needs to buy 0.73 Ether contracts of the $4,160 call in order to avoid excessive upside losses. Similarly, buying 1.26 Ether contracts of $1,440 puts will protect against more significant negative price moves.

As the estimate above shows, any outcome between $1,780 and $3,885 is positive. For example, a 20% price increase to $2,160 results in a $478 net gain. Meanwhile, this strategy’s maximum loss is $425 if Ether trades at $1,440 or lower on March 26.

On the other hand, this strategy can net a positive $580 or higher gain from $2,240 to $3,100 at expiry. Overall it yields a much better risk-reward from leveraged futures trading, for example. Using 3x leverage would incur a $425 loss as soon as Ether drops 8%.

This multiple options strategy trade provides a better risk-reward for those seeking exposure to Ether’s price increase. Moreover, there is zero upfront funds involved for the strategy, except from the margin or collateral deposit requirements.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin and ethereum prices ‘seem high,’ says Musk

TipRanks

When billionaire financier Ray Dalio makes a move, Wall Street pays attention. Dalio, who got his start working on the floor of the New York Stock Exchange trading commodity futures, founded the world’s largest hedge fund, Bridgewater Associates, in 1975. With the firm managing about $140 billion in global investments and Dalio’s own net worth coming at $17 billion, he has earned legendary status on Wall Street. Summing up his success, Dalio has three pieces of advice for investors. First, diversify. Keeping a wide range of stocks in the portfolio, from multiple sectors, is the surest way to invest well. Second, don’t think that rising markets will rise forever. This is Dalio’s variation on an old saw that past performance does not guarantee future returns. Dalio will tell you that all strong past returns really guarantee are current high prices. And finally, Dalio tells investors, “Do the opposite of what your instincts are.” Or put another way, don’t follow the herd, as such thinking frequently leads to suboptimal results. Looking to Dalio for investing inspiration, we used TipRanks’ database to find out if three stocks the billionaire recently added to the fund represent compelling plays. According to the platform, the analyst community believes they do, with all of the picks earning “Strong Buy” consensus ratings. Linde PLC (LIN) The first new position is in Linde, the world’s largest industrial gas production company, whether counting by revenues or market share. Linde produces a range of gasses for industrial use, and is the dominant supplier of argon, nitrogen, oxygen, and hydrogen, along with niche gasses like carbon dioxide for the soft drink industry. The company also produces gas storage and transfer equipment, welding equipment, and refrigerants. In short, Linde embodies Dalio’s ‘diversify’ dictum. Linde’s industry leadership and essential products helped the company bounce back from the corona crisis. The company’s revenues slipped in 1H20, but grew in the second half, reaching pre-corona levels in Q3 and exceeding those levels in Q4. In a sign of confidence, the company held its dividend steady through the ‘corona year,’ at 96 cents per common share – and in its recent Q1 declaration, Linde raised the payment to $1.06 per share. This annualizes to $4.24 and gives a yield of 1.7%. The key point here is not the modest yield, but the company’s confidence in the security of its positions, allowing it to keep a steady dividend at a time when many peers are cutting profit sharing. It’s no wonder, then, that an investor like Dalio would take an interest in a company like Linde. The billionaire’s fund snapped up 20,149 shares during the fourth quarter, worth $5.05 million at current prices. Assessing Linde for BMO, analyst John McNulty expresses his confidence in Linde’s current performance. “LIN continues to execute on its growth strategy to drive solid double-digit earnings growth, notably without requiring a further macro improvement. In our view, management’s 11-13% guide for 2021 remains conservative driven by its on coming projects, continued pricing, efficiency gains, and solid buybacks with its strong balance sheet and cash flows. Further, the solid FCF position provides them plenty of dry powder for M&A, de-caps, etc. We believe LIN is poised to continue to surprise investors and outperform the broader group even in a cyclical market. the largest global industrial gas company,” McNulty opined. In line with his bullish comments, McNulty rates LIN as a Buy, and his $320 price target implies an upside of ~28% for the coming year. (To watch McNulty’s track record, click here) Wall Street’s analysts are in broad agreement on the quality of Linde’s stock, as shown by the 15 Buy reviews overbalancing the 3 Holds. This gives the stock its Strong Buy analyst consensus rating. Shares are priced at $250.88, and their $295.73 average price target suggests they have ~18% growth ahead. (See LIN stock analysis on TipRanks) BlackRock (BLK) Next up is the world’s largest asset manager. BlackRock has over $8.67 trillion in assets under management. The company is one of the dominant index funds in the US financial scene, and saw $16.2 billion revenue last year, with a net income of $4.9 billion. BlackRock’s recent Q4 report shows its strength, as far as numbers can. EPS came in at $10.02 per share, a 12% sequential gain and a 20% year-over-year gain. Quarterly revenues of $4.8 billion were up 17% yoy. The full-year top line was up 11% from 2019. BlackRock achieved all of this even as the corona crisis flattened the economy in 1H20. In the first quarter of this year, BlackRock declared its regular quarterly dividend, and raised the payment by 13% to $4.13 per common share. At an annualized payment of $16.52, this gives a yield of 2.3%. The company has kept the dividend reliable for the past 12 years. Not wanting to miss out on a compelling opportunity, Dalio’s fund pulled the trigger on 19,917 shares, giving it a new position in BLK. The value of this new addition? More than $14 million. Covering BLK for Deutsche Bank, analyst Brian Bedell writes, “We view 4Q results as very good with strong long-term net inflows across its products which we expect to continue despite a one-time, $55bn pension fund outflow of low-fee equity index assets expected in 1H21 which mgmt. said would have a minimal impact on base fee revenue. Additionally, total net inflows drove annualized organic base management fee growth of 13%, a quarterly record, on annualized long-term organic AuM growth of 7%. We expect organic base fee growth to exceed organic AuM growth coming into 2021 driven by a flow mix skewed toward higher fee-rate products for now.” To this end, Bedell rates BLK a Buy and his $837 price target suggests the stock has ~18% upside ahead of it. (To watch Bedell’s track record, click here) The analyst consensus tells a very similar story. BLK has received 6 Buy ratings in the last three months, against a single Hold – a clear sign that analysts are impressed with the company’s potential. Shares sell for $710.11, and the average price target of $832.17 gives the stock a 17% upside potential. (See BLK stock analysis on TipRanks) AbbVie, Inc. (ABBV) AbbVie is a major name in the pharma industry. The company is the maker of Humira, an anti-inflammatory used in the treatment of a wide range of chronic illnesses including rheumatoid arthritis, Crohn’s disease, and psoriasis. The company’s other immunology drugs, Skyrizi and Rinvoq, were approved by the FDA in 2019 as treatments for psoriasis and rheumatoid arthritis, respectively, and saw combined sales of $2.3 billion last year. AbbVie expects that these drugs will ‘fill the gap’ in profits when the Humira patents expire in 2023, with up to $15 billion in sales by 2025. Humira is currently the main driver of AbbVie’s immunology portfolio, and provides $19.8 billion of the portfolio’s $22.2 billion in annual revenues, and a significant part of the company’s total sales. For the full year 2020, across all divisions, AbbVie saw $45.8 billion in revenues, with an adjusted diluted EPS of $10.56. In addition to its high-profile anti-inflammatory line, AbbVie also has a ‘stable’ of long-established drugs on the market. As an example, the company owns Depakote, a common anti-seizure medication. AbbVie also maintains an active research pipeline, with scores of drug candidates undergoing studies in the disciplines of immunology, neuroscience, oncology, and virology. For investors, AbbVie has a long-standing commitment to returning profits to shareholders. The company has an 8-year history of keeping a reliable – and growing – dividend. In the most recent declaration, made this month for a payment to go out in May, AbbVie raised the dividend 10% to $1.30 per common share. At $5.20 annualized, this gives a yield of 4.9%. Once again, we are looking at stock that embodies some of Dalio’s advice. Pulling the trigger on ABBV in the fourth quarter, Dalio’s firm purchased 25,294 shares. At current valuation, this is worth $2.66 million. Leerink analyst Geoffrey Porges covers ABBV, and is impressed with the way that the company is preparing in advance for the loss of US exclusivity on its best-selling product. “Between ABBV’s ex-Humira portfolio’s growth trajectory and a broad portfolio of catalysts across early-, mid-, and late-stage assets, it is hard to find a biopharma company that is better positioned, even with their looming LOE. ABBV is prepared for 2023, and has growth drivers to drive better than industry average top- and bottom-line growth in the period before (2021-2022) and after (2024-2028) 2023,” Porges opined. Porges gives ABBV an Outperform (i.e. Buy) rating, and sets a $140 price target that indicates room for a 33% one-year upside. (To watch Porges’ track record, click here) Overall, there are 10 reviews on ABBV shares, and 9 of those are to Buy – a margin that makes the analyst consensus rating a Strong Buy. The stock is trading for $105.01 and has an average price target of $122.60. This suggests an upside of ~17% over the next 12 months. (See ABBV stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.