Wednesday, December 27, 2017

Crypto Space Bear Market Update

It’s been quite some time since I updated this blog.  I’ve been busy to say the least, and managing my crypto investments has been taking more and more of my time as this space is changing so rapidly.

The fundamental outlook for the space is truly phenomenal.  I believe it’s the most important technology of our lifetimes – and I will spell out why I think so and where I think it’s going on my new website “Cryptonomic Edge” in the coming days.  As I spin up that site, which is currently under construction, then I’ll notify everyone here.

I have a group of friends who I have been coaching on the crypto space and have been providing daily updates to them.  In the middle of this month as Bitcoin approached $20,000 I began taking profits and noticed the following:

First came a feeling of a lack of new enthusiasm and buying pressure across the legacy coins.

Then I noticed that the usual ABC corrective declines had suddenly turned into 5 wave affairs, and that bounces were now 3 waves.  This indicates a change in the character of the market, it had turned the corner from a simple corrective decline into a bear market.

I notified my investor group that the market had changed and to expect a deeper and longer correction than those of the recent past.

As Prices made their way down wave 1, their fifth wave down bounced and made what was clearly a right shoulder of a textbook perfect Head & Shoulders pattern with the neckline at the $16,000 mark.
I advised the group that on a break of that neckline that prices were targeting roughly $12,000. 

On the initial break of that neckline I largely sold out my remaining positions to cash and to some other safety positions I’ll talk about later.

That target was reached, there was a bounce, and then prices bottomed out at $10,400 during what was obvious selling capitulation on high volume.  There was then a very strong bounce off that bottom that created a classic “V” bottom.

But the bounce off the bottom began to also run out of energy and was clearly making what looked like another even larger right shoulder to a giant H&S pattern.

Over my 30+ years of market investing I’ve seen this type of market two other times – once in the Nasdaq following the late 1999 top, and then again with the stock markets here in 2007.  Similarly, they began waterfall descents that stopped at support to create a series of progressively larger H&S patterns.

I currently see prices between the original $16,000 neckline, and the larger, yet to be confirmed $13,200 neckline.  If we descend below that larger neckline, then the target for that pattern is approximately $6,600!  That won’t be enjoyable ride should it occur.

Here’s my current Bitcoin chart:

Note that chart is using Bitcoin data from Bitstamp.  The price on the exchanges varies, a fact I will be explaining in subsequent articles.

Looking at that big picture chart, the Bitcoin market is currently at a crossroads, the wave count can be read two different ways.  The bearish case is presented on the chart, however, it is possible that the V bottom at $10,400 was THE bottom and that we have since moved higher completing waves 1 and 2 up, and are now in wave 2 of 3 up.  That would be bullish if so.  But frankly there are too many bearish signs right now.

I am still seeing 5 wave moves down = bearish.  The other major coins are also weak.  Litecoin is the weakest of the four on Coinbase – it failed to exceed its last high.  The strongest chart on Coinbase is Ethereum, but it, too, looks weak.  Bitcoin Cash created a large triangle and has now broke beneath the bottom boundary after it also failed to make a new high.

If I zoom in on a Coinbase Bitcoin chart, here is what I currently see on a 30 minute chart:

There currently is yet another small H&S pattern forming with a neckline at $14,500.  If that level breaks, then the Coinbase Bitcoin target will be roughly $12,500.  And if that happens, then we’ll break the Giant H&S neckline just above $13,000, thus triggering the very bearish scenario.

Alternatively, if we proceed higher from here, we need to get back above resistance at the old H&S neckline, above Coinbase Bitcoin $16,270, and we then need to hold that level.  If we do so, that would be bullish.  But again, it didn’t hold last night so for now I am favoring the bearish outcome unless we regain that mark.  Here's a chart IF the bullish scenario is occuring:

My friends and I have learned a ton recently about using the various exchanges, moving in and out of electronic wallets, etc.  I know there are a lot of people out there who can use help, and as I get this new Cryptonomic Edge website up will be available to help in the form of regular market updates, crypto newsletters, and also with one on one personal crypto tutoring.

In the crypto space only you are responsible for your money.  There’s no bank or FDIC to protect you.  And as we already knew this market is extremely volatile.  This means either close your eyes and hope, or be active in your own education and money management.

DO NOT LISTEN to the naysayers whose livelihoods depend upon the mainstream narrative.  Bitcoin is NOT going to zero, it is not a tulip, but it did get ahead of itself and is correcting.  Unlike the completely fake and controlled mainstream markets, the cyrypto markets are REAL and they are thankfully behaving that way!  Real markets correct, thus giving new money an entry point.  That point is coming, I believe, in the next few days and I am keeping my powder dry in order to ratchet my profits even further.

I will be posting my group updates here, on Economic Edge until the new site is up and running.
Hope everyone had a very Merry Christmas and are looking forward to the New Year!