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Analysis

Monster rally in Dash and Zcash

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As you may have guessed, I receive emails every day from traders of all different stripes and persuasions.  I answer when I can, but often just short replies as time is a valuable commodity.  But there is a recurrent question that comes up, and the question is usually raised by traders I can sense are inexperienced.  They ask me when they should short this asset or that one…

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My answer to that is one should never short a bull market, particularly if you are inexperienced enough to have to ask when to do it.

I have been trading for decades and I am afraid to short any of the coins these days.  We are in a major bull market, so the surprises will always be to the upside.  Look at that happened to DASH and ZEC yesterday. Oh my god… If you had been short either of those, even a stop loss may not have been enough to keep you from being wiped out.

I see that Bitcoin reversed yesterday EXACTLY at the time and price we had been forecasting for days.  I thought about shorting it because I could see the turning point coming, but I did not.  I was AFRAID to do so, knowing that there is so much money pouring into the coins these days.  As it turned out, after a brief fall, XBT reversed again, and made yet another new high.  Wasn’t I happy I wasn’t short!!

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To summarize, there is a time and place to short.  May 2017 is not the time.  When you are experienced enough to know when to short, without asking anyone else’s opinion on the matter, then and only then will it be a good idea for you to trade the short side, IMHO.

DASH

What the hell happened here?????  I saw the test of support at the 1×2 angle.  I mentioned it in yesterday’s column, but this rally was just too much.  I can’t imagine how much money went into this market in a few hours to do this.  This was not mom and pop investors.  This was institutional money.  The game is changing. It’s not clear if there is more to come.  The rally stopped just above the top of the setup, and is currently just below the 5th arc.  We will have to wait and see.

Zcash

The same thing happened to ZEC.  This is just insane.  To anyone who caught these monster rallies, my hat is off to you.  I had to change my scale to accommodate the rise in this coin.  At the present scale it seems there is more to go in this rally.

Ripple

Ripple remains stuck in an arc pair and can’t seem to get free.  An energy point approaches (red vertical line).  While I suspect the low is already in, it might yet fall to test the 1×2 Gann angle (blue arrow).

Happy trading!

 

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

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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13 Comments

13 Comments

  1. [email protected]

    May 22, 2017 at 11:58 pm

    Hi Jim, any thoughts on LTC? I am out yesterday at 24.5. It seems it’s not going down again. Should I buy in again at current price?

  2. Jim Fredrickson

    May 23, 2017 at 12:04 am

    I bought LTC at near the low yesterday. I tweeted at the time that I thought the low was in. We will see…

    • tudord

      May 25, 2017 at 2:17 am

      Where do you post entries Jim?

      • Jim Fredrickson

        May 26, 2017 at 1:02 am

        I don’t post entries directly, since i don’t know traders timeframes for trading (amongst other necessary info). however i often tweet when I see a trading opportunity arise.

  3. Gabriel

    May 23, 2017 at 2:03 am

    Buy low and sell high! It is reasonable to expect that other coins such as LTC and XMR may get similar breakouts, so just get in at a low price and hold tight 🙂

    • iamniks

      May 23, 2017 at 9:45 am

      It is impossible to expect =) Zec had a breakout just because JP Morgan integrated their technology this wasn’t a regular pump and dump

  4. unitednoobies

    May 23, 2017 at 6:13 am

    Hi Jim,

    Where is XRP going after this steep correction? When do you expect a move up and to what target price point?

    All the best,
    Brian

    • Jim Fredrickson

      May 23, 2017 at 7:35 am

      of course, i might be wrong, but i am buying XRP here, target minimum of $1 over next several weeks or less i imagine.

      • Jeremi Fisher

        May 23, 2017 at 8:53 am

        I also have our target set around $1 on XRP. We have a feeling XRP will rally hard in the next week or 2

  5. amirheavy666

    May 23, 2017 at 6:17 am

    jim what’s you idea about Augur (REP)?
    i think it go up ?agree?

    • Jim Fredrickson

      May 23, 2017 at 7:36 am

      yes, it is going up as we speak

  6. kochelli

    May 23, 2017 at 9:21 pm

    Jim… where can I read about your geometric system? I understand it when you have the angles and arcs on the chart, but I don’t understand how you come up with them.

    What creates the arc pair? Is it timing that spaces the arcs or are there some other factors that create them? I’ve looked around at the site and I haven’t seen any information on them. I’m very interested in how you come up with them.

    Also, what are you using to draw the lines? I don’t really like any of the sites I visit for visualization but the ones you use are great. Are you generating those yourself or are you using another site? It doesn’t look like you are using Kraken for the charts.

    Thanks!

    • Jim Fredrickson

      May 25, 2017 at 10:22 am

      feel free to write me privately for more info.

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Analysis

Technical Analysis: Litecoin Continues Surge as Bitcoin Tests Highs

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With the crypto world being focused on the historical futures launch, the major coins all enjoyed buying following a hectic weekend, and a volatile week as a whole. BTC itself got another boost from the widespread publicity and the volatile correction of the recent days ended, with the most valuable coin bouncing back towards its all-time high.

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While the long-term picture remains severely overbought, the short-term picture is not stretched and further gains are possible even amid the elevated correction risk. That said, investors should wait for a more favorable entry point to ad dot their holdings, while traders should control position sizes in the light of the long-term setup. Major support levels are now near $13,000, $11,300, and $10,000, with stronger levels still at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

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The major altcoins are all up today, but only Monero and Litecoin are still within short-term uptrends, and the segment as a whole is still dangerously overextended, and a deeper correction is very likely in the coming weeks. LTC continued its recent break-out, getting close to the $200 level, and joining the extremely overbought group regarding the long-term momentum, and triggering a long-term sell signal in our trend model. Key support levels are found $100 at $75 and $64, with a weaker primary level at $125.

LTC/USD, 4-Hour Chart Analysis

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Analysis

Long-Term Analysis of the Silver Market

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Silver

The silver market has once again caught investors’ interest as the price is nearing areas not seen since late 2008.

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2017 started at a low point for silver, and it seems it will end the year that way as well, meaning investors who bought at the beginning of the year haven’t suffered nor gained much.

This doesn’t mean, however, that the price hasn’t moved during the year. After the low start of the year, silver quickly tacked on about 18% to a top of $17.50 per ounce.

In terms of fundamentals in the silver market, things look a bit complicated for 2018. There are multiple forces pulling in different directions for the price of silver going forward:

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Positives

  • A sharp stock market correction can be expected to occur some time in 2018. Most likely, this will happen sooner rather than later. Stock market crashes always trigger a flight to safety, meaning gold, silver, and quite possibly bitcoin, can benefit.
  • We are seeing signs that inflation may be starting to rise again, although this is not confirmed yet. Rising inflation is always good for precious metals.
  • If the US federal budget deficit widens as a result of the new tax reform, the US dollar may suffer as a consequence. Goldman Sachs put out a note to investors in November 2017 saying that the US debt is “on track” to reach an “unsustainable” level in coming years. Fed Chair Janet Yellen has also said about the US debt that it is “the type of thing that should keep people awake at night.” Rising debt levels creates uncertainty about the economy, which is generally good for gold and silver.

Negatives

  • Central banks around the world seem committed to raise interest rates in 2018. Rising interest rates are bad for precious metals because it would make it more attractive to put money in the bank.
  • The cryptocurrency bull market is on track to continue, diverting attention and capital away from precious metals as a traditional store of value. However, this one is uncertain, as it may also be considered a positive in the way that the rise of cryptocurrencies brings the inflationary and unsustainable nature of fiat currencies into focus.
  • The US dollar may have hit a bottom in 2017 and trade higher compared to other major fiat currencies going into 2018. A stronger dollar is always bad for precious metals, which are priced in dollars.

Silver chart

When looking at the chart, we can see that silver is back down to were it started the year, which coincides with a major support area where it has turned several times in the past few years.

From a technical perspective, silver has been trading in a triangle pattern on the longer-term weekly chart, with the price now trading very near the lower end of the triangle, adding confluence to our bias that silver will trade up from here.

Silver failed to live up to our prediction from early 2017, and is now even trading well below the level from that time.

A low price by any measure combined with two major technical support levels adds confidence to our trade and makes silver a low risk and potentially high reward trade for 2018.

Depending on your own strategy and investment style, you may want to wait for the price to break out from the current triangle pattern it has been trading in for the past year and a half. You would then give up some of the potential return for an even safer trade. After that, major resistance is found around $17.50 and $18, with lots of upside potential if we can finally break through those levels.

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Analysis

Long-Term Cryptocurrency Analysis: Look Out Below?

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After last week’s observation that a major top is in or near in the segment, the Bitcoin surge continued for almost a week, with Thursday’s wild session taking the coin as high as $19,000 (the article uses Bitstamp prices) on some exchanges. While the currency already pulled back by more than 20% the long-term picture is still extremely overbought and a much deeper correction is likely in the coming weeks.

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BTC spiked below $13,000 today, violating the primary weak support at $13,300, with further levels now at $11,300, $10,000 and $9000, but stronger support only found at $8200 and $7700. Next week’s futures launch could cause another jump in trading activity, and volatility is expected to remain very high amid the likely correction.

BTC/USD, Daily Chart Analysis

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While not all altcoins participated in the, supposedly, last part of the rally, IOTA, Monero, and towards the end of the week Litecoin, also stretched above all conventional targets with IOTA also turning exponential after a deal with Microsoft. The coin exploded by more than 350% before entering an initial sharp correction, breaking the steepest short-term uptrend. Strong support is only found at $3 and $1.5, but potential Fibonacci support is at $2.35.

IOT/USD, Daily Chart Analysis

Let’s see how the long-term charts of the other altcoins look after the crazy week.

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