Thursday, December 28, 2017

Crypto Update

Good Morning!

Yesterday Bitcoin followed the bearish path, however, the latest H&S target has not yet been reached.  That target is approximately $12,500 Bitcoin, and if reached would confirm the very large H&S that would target much lower.

Yesterday evening it was reported that South Korea issued a warning to the crypto exchanges, that they need to clean up their act or they may face possible closures.  The media blamed the latest descent last night on that, but of course the H&S pattern I pointed out yesterday already knew the descent was coming.

There is yet another Bitcoin fork occurring today, it is the B2X fork.  This fork creates a new coin that works faster with Lightning technology and has lower trading costs.  I wonder… will savvy investors hold Bitcoin today in order to receive their split, but then dump tomorrow with bearish charts?  Will be interesting to see, Bitcoin itself has only gone higher following previous forks – but the character of this current pullback is much different.

Prices this morning went back up to the last neckline where they look like they will likely fail.  Counting waves, it looks like the latest movement is wave 4 and potentially wave 5 would take us to the $12,500 target range if the bearish perspective is still happening.

It’s difficult to see a case where prices just rip higher from here, especially with all the major coins looking very weak, all have troubling charts.  That said, I do see a middle of the road possibility developing where prices are trapped in between support at the giant neckline and overhead resistance at the original neckline.  I also see what could potentially be a shallower channel forming, depicted by the parallel thin red lines below:

For that to happen, prices need to move higher throughout the day today, but it’s hard to see where that energy could come from. 

Here’s a close in look at the Bitcoin chart, 15 minutes:

My position is still very defensive.  My holdings on Coinbase are 100% cash.  Yesterday morning I sent some Bitcoin to my Bitpay app and used it to buy gold from JM Bullion.  I also spent more time pouring over best performing tokens/coins during the prior large Bitcoin descent and I found that Ripple has enjoyed a tremendous run, and I moved a large amount of my remaining portfolio there.  It is up this morning, but I’m watching it like a hawk as it’s obviously very volatile.  Like Bitcoin, Ripple is also limited in supply, however, their ultimate supply will be in the billions of coins, not millions, so I see Ripple being a stronger transactional coin, but not the store of value Bitcoin is.  Therefor I view this position as short term.

Here’s the Ripple daily chart, note how it took off just as Bitcoin was declining:

I’m going to be extra careful with this one.  My overall plan is to stay defensive until I can identify an ongoing bullish trend.  My experience is telling me that we need another round of heavy, scary selling to create another capitulation bottom – if that occurs, or if a more bullish trend emerges, then I’ll be jumping back in.