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Analysis: Has Ethereum Reached its Peak? Here is Another Cryptocurrency to Watch

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Ethereum

Ethereum is looking at several layers of resistance on multiple timeframes.  It is time to exit that trade, in my opinion.  Here is an example, on the 4 hour chart:

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Other timeframes look equally scary.  It seems to me that more aggressive traders will look for a short in this area.  However, it is too scary to short a bull market like this one for me.  I’ll leave that trade to others.

Bitcoin

Bitcoin is stuck in a sideways movement which does not have any obvious reason to advance until its siblings top out.  It is above the top of the square, so it does not look like a fall is imminent.  However, the shorter-term charts are not just sideways, they are flat.

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While eth is looking likely to top out quite soon, others, such as Monero, are looking poised to move upwards next:

Monero

This chart looks delightful.  Pricetime has only just crossed the 1st arc pair.  The 3rd arc pair is a good first target at $26, but it would not surprise me at all if it went to the 5th pair, at ~$36

All in all, it appears that for now at least, the so-called ‘altcoins’ have taken center stage.  Bitcoin may resume its run in the not-distant future, but for the time being, the money is rolling into several of the better-known of her siblings in the crypto space.

Bonds

US Treasury Bonds are arguably the most traded contract on the planet.  With all the talk about interest rate hikes in the news, I decided to take a look at the chart to see what the reason was that such talk was in the air.  As you can see, bonds are very near the 5th arc on a daily chart.  Either the low is already in, or there is just one more push down remaining.

Happy trading!

 

Remember:  The author is a trader who is subject to all manner of error in judgement.  Do your own research, and be prepared to take full responsibility for your own trades.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 1 rated postsJim has an MBA from the University of Southern California. He has had a long career in both Corporate Finance and IT. Along the way he discovered that trading was a vehicle with great promise, but struggled for a long time without a mentor. After having been knocked down many times and having struggled to get back up, he had an epiphany and realized that geometry was a solution. He shares his experience here. If you do well as a result of suggestions made here, feel free to say thank you :) BTC: 1FUq3GB1Q8zz2JpuBr7YHzVBKnaWoxgmya Follow him on Twitter (@jimfred1276) or email him at jimfred1276 at gmail.




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2 Comments

2 Comments

  1. tadej

    March 16, 2017 at 11:57 am

    Hi Jim,

    What is your take on BTC hardfork. Is it wise to short the positions now and wait until the situation gets more clear?

    Thanks

  2. Jim Fredrickson

    March 17, 2017 at 1:35 am

    I would not short BTC unless you know precisely what you are doing. In all likelihood, Wall Street was trying to front-run the ETF deal and is now putting all that cash into the various altcoins. At some point though BTC is likely to head higher – much higher.
    For my money/risk tolerance, better to just stay out of BTC rather than short it. ETH is likely at or close to it’s peak, but watch Monero, ZEC, and even Litecoin, which is still less than $5. There are almost certainly some money to be made in all of these coins.
    Just my opinion. Good luck.

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Analysis

Crypto Update: Coins Consolidate Above Support but Downtrend Still Intact

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It has been a very quiet weekend for the major cryptocurrencies so far, as the predominantly bearish week ended with range trading and a collapse in volumes across the board. Most of the top coins failed to gain back the ground they lost during the steep selloff, with only Binance Coin and VeChain showing meaningful bullish momentum.

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The relatively strong Ethereum, EOS, and Ripple remained stable, with ETH hovering around the $500 level, EOS trading north of the key $10 support despite the network’s technical issues, and Ripple being stuck in a narrow range just below the widely-watched $0.54 resistance level. The total capitalization of the market has been virtually unchanged at $280 billion, as both Bitcoin and Ethereum flatlined.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin is trading right at the short-term support level near $6500, holding up just above the April low, with the crucial long-term support zone near $5850 that is vital for the whole segment. The coin is clearly in a short-term downtrend, while also being relatively weak on all time frames. The oversold short-term momentum readings are now cleared and that could point to a test of the lows in the coming days.

 

ETH/USD, 4-Hour Chart Analysis

Ethereum also cleared the short-term oversold readings, but it failed to leave the vicinity of the $500 support/resistance level. Despite the coin’s undoubted relative strength, and the still bullish long-term setup, the short-term trend signal remains a sell, and the declining trend is intact. Traders should still not enter new positions here, while investors could add to their holdings on the short-term selloffs. Strong resistance is ahead between $555 and $575, while further support is found at $450, $400, and $380.

Divide Widens between Leaders and Laggards

LTC/USD, 4-Hour Chart Analysis

Although short-term correlations skyrocketed during last week’s decline, the divergence between the relatively strong and weak coins got even more pronounced, with the likes of Litecoin, Dash, and Monero severely lagging the broader market. Litecoin got stuck below the $100 level after the breakdown last week, and it is below the long-term base pattern, as it failed to show relative strength during the weekend. Immediate support is found at $90, but new lows are likely in the coming days, as the short-term downtrend remains dominant. 

BNB/USDT, 4-Hour Chart Analysis

As a positive outlier, Binance Coin remained bullish amid the broad decline, holding on to the relative strength that it has been showing for several weeks. The coin’s stability is encouraging, and it’s nearing its rally highs with today’s surge, while having a good chance of resuming its uptrend, even as another segment-wide selloff could cause a jump in volatility again.

For now, the market is torn between bullish and bearish forces, and investors should focus on the technicals of BTC and ETH, while also keeping an eye on the leaders of the rally for signs of sutained strenght.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 275 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Long-Term Cryptocurrency Analysis: Bull Market in Jeopardy

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As the crucial rally attempt that we pointed out in our previous long-term analysis failed, and the major coins sold off heavily afterwards, the segment is now in a difficult situation. While Bitcoin and especially Ethereum are still in bullish setups, the most valuable coin is now close to a major breakdown that could lead to structural bear market as we laid it out back in January.

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Some of the weaker coins are already below the large-scale consolidation patterns that developed after the year-end run-up, and as the divergence between the leaders and the laggards widens, the path of the two dominant coins even more importance.

BTC/USD, Daily Chart Analysis

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Bitcoin failed to trigger a short-term buy signal throughout the Ethereum-led rally in May and early June, and that technical weakness still persists, as BTC is now trading right at the April low, testing the key long-term base pattern.

A break below the strong support zone near $5850 would be the first similar event since the beginning of the bear market in 2014, and it could lead to an extended period of bearish bias for Bitcoin after the spectacular bull run of 2017. For now, the bull market is intact, with support found near between $6000 and $6275, at $5850 and below that at $5500, while resistance is ahead at $6500, $7000, $7350, and $7650.

ETH/USD, Daily Chart Analysis

Although Ethereum is clearly stronger from a technical perspective compared to Bitcoin, the coin is struggling to hold the key $500 level, as it is resumed its short-term downtrend. The April lows are well below the current price level and the long-term setup is bullish, so long-term investors could still add to their positions during the selloffs. Resistance above $500 is ahead between $555 and $575, while strong support is near $450, $400, $380.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 275 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Altcoins

Crypto Psycho:  Crazy Price Action

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Say what you will about the cryptocurrency bubble of 2017 not making sense, what about the action lately?  Prices are acting terribly. Professor John Griffin claims last year’s bitcoin rally was manufactured by Bitfinex. Economist Nouriel Roubini proclaims bitcoin is going to zero. The founder of Crypto Asset Management says about bitcoin: “We are shorting it like maniacs at the moment.”  If that is not enough, technical indicators keep barking downtrend.

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Over the past week already depressed prices have fallen further with things like bitcoin down 14%+, Ethereum 17% and XRP 21%.  Yes, there were those stories about the CFTC digging into price manipulation and demanding more data from Coinbase and other exchanges. And then there was the hack on that small exchange in South Korea.  But nobody could reasonably pin the blame of this week’s performance on these two factors.

MarketWatch quoted Matt Hougan, head of global trading at Bitwise Asset Management: “The big story to me is the absence of positive news”.  There is some truth to this but that is only part of the story. As we pointed out in a recent article, most serious investors in crypto don’t pretend to understand what is causing the mess.  

When bitcoin evangelist Alistair Milne published a survey of his Twitter followers, 81% of them had nary a clue.  Interestingly enough though, almost half of these respondents checked the box “Crypto iz ded”.

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What exactly to conclude from this is open to interpretation but one thing is clear.  It is a big part of the problem long term investors face today. Crypto psychology sucks, the worst it has been since the Mt. Gox hack of 2010.

Good News Being Ignored

One of the barriers to progress in the crypto wars was the issue of regulatory clarification. Are cryptocurrencies simply digital assets or a class of securities that fall under the regulation of the Securities and Exchange Commission?

That question has now been answered.  On Thursday, the SEC’s announced that both bitcoin and Ethereum were not securities but digital assets.  However, the good news does not end here.

William Himman, representing the SEC, clarified the position of Initial Coin Offerings.  In cases where the ICO does not convey equity ownership of an enterprise and where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created, it does not qualify as a security.

This represents one huge step forward in clarifying the regulatory environment and yet the markets response was brief and uninspiring as the full week’s performance unfortunately demonstrates. Honestly, this is a bit bizarre.

Other Good News Being Ignored

Crypto Asset Management may be short selling lots of currencies, but they are not alone.  According to www.bfxdata.com/swaphistory/usd  margin interest in bitcoin and Ethereum is in excess of $1.2 billion.  While this is down from around $2 billion last December it still represents a sizable pool of future buyers.

It’s In The Mind

For digital asset prices reflect not only investor sentiment but also those who represent ultimate users.  For a digital currency to represent a storehouse of value, it must have public trust. Right now that appears to be at a low.

According to the British publication London Loves Business, the story is pretty clear. Headlines state “71% of the UK public think the value of Bitcoin will either decrease or collapse over the next six months.”  According to LLB,  this represents a 10% fall in investor confidence since the same question was last asked in April’s 2018 poll and a 24% fall in investor confidence from November’s 2017 poll figures.  In other words, the price of bitcoin holds the same implication for investors as it does for potential users.

This Too Shall Pass

Mob psychology often proves wrong and this negative mindset appears to be feeding off of itself right now.  Even one of crypto’s biggest critics Warren Buffett would agree that betting against the mob has been a big part of his investment strategy. At some point the mob will once again be proven wrong when short sellers get spooked and forced to cover positions or value investors will filter over from an overpriced U.S. equity market.  Either way, there is value in the crypto market that has not existed for quite some time. In the end, 71% of the Brits surveyed will be proven wrong also.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 81 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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