Recently a good friend of mine wrote the following post, and I thought you might enjoy reading it too. He is an investor. This post is about cryptocurrency price movements.
I’d like to explain in detail why I think we are on the threshold of yet another strong rebound.
BTC is the crypto this technical analysis will be based on because it is the largest cryptocurrency by volume, and the one that often pushes the movement of the rest.
Others like ETH, XRP, and ARDR will likely follow a similar pattern to BTC. What do you see in the following image?
There are four almost equal cycles showing a big explosion, followed by a correction, then a small rebound, and from there to a bearish movement. This pattern repeated in the BTC price chart in 2011, 2013, 2014 and 2018. We currently are at the position shown at the 4th chart in the lower right quadrant.
If we observe the charts in a continuous way, we will see that the first three cycles are almost inappreciable.
From this, we can draw several conclusions:
1. Each correction has been at least 70%, and 85% on average.
2. The longest correction period lasted 12 months. If we are currently on the 4th cycle, and December’s lows really were the bottom of the market, then the cycle would have already lasted 12 months. However, if new lows haven’t yet been made this would be the cycle with the longest correction. But it would most likely not be the one with the biggest drop since the first cycle caused a 93% drop.
3. Each new bullish expansive cycle goes over the previous highs at a 5x to 17x rate.
4. Trading is a world of recurring patterns reflecting investors’ sentiment. BTC is the one which best reflects these sentiments and patterns.
No matter if the price in December, 2018 was the bottom or not, what is more interesting for us is the projection of the price if the 5th wave has already started. If previous highs at $20,000 are surpassed, the expected price could go up to $100,000 – $340,000, more or less.
With this in mind, let’s have a look at the Technical Analysis. I’m not a big fan of relying on just these technical indicators, because the standard values of their algorithm might not belong or are not optimized for every single asset or time frame. For example, MACD 26-12-9 can’t be used to work on the EUR-USD chart or on the 60′ Nasdaq chart.
Every asset, every financial instrument has its own particular movement for longs and shorts swings. That’s the reason why I just use Technical Indicators to try to find market turns close to the bottom or the ceiling
Let’s have a look at the following chart:
This is a weekly Ardor price chart in dollars taken from Poloniex, with the help of Trading View. We can see that the price hit the bottom in December, 2018 (still needs to be confirmed), while the MACD indicator made a “fail”, i.e. the fast line (red) wasn’t able to cross the slow line (blue), at the time when new lows were reached (or with the closest candles). To me, this indicates a strong rebound is coming.
Notice the Fibonacci indicator (in blue) made 2 consecutive weekly break downs to the 23.6% level, and remained under that level but without reaching new lows. We looked into that and tried to find good entry points at charts with smaller time-frames.
On the daily chart it’s easy to see the degradation of the price drop, since while the price was reaching new lows, the MACD indicator was going higher and higher. This can happen 2, 3, 4 times or even more, but it’s a clear signal that the price drop is softening.
It would be rare that when we’ve had a “fail” in the weekly MACD and had broken the 23.6% level we wouldn’t have the chance to test the 61.8% without setting a new low before. Because a new low is still possible, but from what we’ve seen, if the lows of December aren’t the bottom, the new lows will only be reached for a short period of time.
Finally I had to make a decision, and I decided to open positions during January and February, 2019 at an average price of 1,528 satoshis. Recently the price has almost reached the first objective at 2,900 satoshis.
However, as can be seen in the above chart with the Fibonacci itineraries, the objectives are set at $0.10 and $0.20.
At that point, when two or more Fibonacci itineraries run into each other – specifically at the $0.20 level- we’ll be facing a dilemma. What shall I do? Shall I sell and make a x3.5 profit? Or shall I wait until BTC’s 5th wave takes its price to $100,000?
If that happened, ARDOR would easily go over $2.30 (its highest price ever) and could 5x that price, reaching $10-$12.
Is all of this crazy? No. People tend to think that today is different, but what is happening today has already happened 4 times before. Why wouldn’t this be the fifth one?
Maybe in 2-3 years, we will look back at the correction from the 5th wave and be waiting for the 6th wave to start, we will think it can not happen again.
Remember that patterns repeat over time and that human traders are the ones moving the price, even when high-frequency trading bots are around. These bots have been configured by humans to repeat the same patterns time after time.
Finally, my personal prediction, if BTC goes over $20,000:
- – BTC $100000-$340000
- – XRP $15-$60
- – ETH $7,000-$25,000
- – IOTA$30-$110
- – ARDOR $11-$40
This article is for general information only. It does not take into account the reader’s personal circumstances, objectives or attitude towards risk. It is not (and is not intended to be) any form of advice, recommendation, or endorsement by the author or the web site owner and should not be relied upon when making (or refraining from making) any investment decision.
Remember: the market can remain irrational longer than you can remain solvent; investments can fall as well as rise in value and past performance is no indication of future performance.