If All Goes Well, This Setup Could Take Us Out of the 2018 Bear Market…. “If”
Bitcoin’s weekly chart, Ether’s daily, Litecoin’s daily, and many more are all setup for a range of golden crosses. Simply put, many short term averages are about to cross over long term averages on the higher time frames… which is a bullish setup.
UPDATE Nov 28, 2018: A failure to cross with conviction actually ended up killing the bulls. The bears essentially thwarted the rally at this key technical point I discuss on this page. The news item that paired with it, as you’ll read below, was “the Winkelvoss FUD.”
UPDATE JULY 28, 2018: As time rolls along, this page will become historic rather than relevant to the here and now. Today on July 28 we are recovering from a major setback (the rejection of the Winkelvoss ETF). That rejection smacked down Bitcoin and that dragged down alts (in both fiat and BTC prices) and that set us back a bit in terms of breaking out of the resistance described below. That said, the setup is still there for alts and Bitcoin has since recovered a bit. Bitcoin currently is showing an inverted head and shoulders (see BTC 2hr chart), this could be the catalyst we need to set everything in motion.
On top of that there are some other bullish signs, for example:
- Many short terms are about to cross over long terms on a range of time scales on many pairs and on many coins in USD. On smaller time scales many have already crossed. The key 12 and 26 are very close to crossing on a range of key alts (ETH and LTC for example).
- Ether is set up for an Adam and Eve on its USD daily chart.
- The prices of most coins just bounced off the bottom of the Bollinger Bands, are staying above the middle moving average, and are trending up on the daily (a bull would want to see them touch the top of the band, continue up, and not get rejected).
- Prices of many alts are about to hit or have hit their December 2017 and/or April 2018 lows in BTC prices (those levels should act as support).
- Some key coins are making higher highs and higher lows in USD (ETH and LTC for example).
- At this moment some key coins have bull flags sitting right below their long term averages just waiting to burst above them (see ETH in the chart above for example; LTC has this too, so does BCH, etc). NOTE: BTC also has a nice bull flag on its daily.
- Bitcoin and XLM both preformed really well with the same general setup, although both of those had some really good news (a potential ETF for BTC and a listing on Coinbase and more for XLM). One would be looking for altcoins to repeat follow this pattern.
In theory, If all goes well, what could happen [not will] is that Bitcoin going up another leg takes key alts (Ether, Bitcoin Cash, and Litecoin for example) with it in terms of fiat values, that is enough to break those coins out of their current resistance and results in a range of golden crosses and other bullish occurrences on the daily chart, however… Bitcoin runs harder than alts, so alts actually fall in BTC value, this smashes those alts up against April / December supports in BTC value. So you get this multilayered event where golden crosses are formed in USD pairs while supports are hit in BTC pairs. Thus, not only are alts incentivized to run in fiat, but in BTC pairs. This then, if all goes well and works like that, sparks a major alt run for some alts, which then incentivizes other alts to run.
This is the sort of grand setup we saw in late 2017, Bitcoin ran first, that helps lift alts out of their resistances in fiat, but it crushed alts in terms of BTC prices, however those low prices in terms of BTC, paired with the general excitement, paired with lifting alts past their resistance levels, resulted in one of the biggest altcoin runs of all time.
The setup is there, we haven’t seen a setup this good in a while, and historically BTC breaking out of its weekly long terms like this has always led to epic bull markets… but we aren’t there just yet. We need a little more positive price action… and clearly there are a lot of things that need to go right to make this all work. If too many things go wrong, say if Bitcoin flops around like a dead cat, alts could lose their bullish set up, resume a downtrend, and blow past supports in BTC prices, thus continuing the 2018 bear market, then clearly it goes a long way toward invalidating all of this.
Still, pretty exciting set-up to see for crypto fans.
NOTE: This is meant to be educational, not to be used as investing advice. Always do your own research and never risk more than you can afford to lose (as crypto is insanely risky even on the best of days).
NOTE: In crypto especially we have seen bullish patterns break down right at the last moment or bearish patterns reverse at the last moment. Make of that what you will, but it happens all the time. That said, there is a lot of bullish patterns overlaid here, which I think helps the bull case.
NOTE: On the mixed-bag side, one of a few important indicators is RSI. RSI is very oversold on BTC pairs (which is a good setup for a reversal) but very overbought on BTC/USD. In theory you don’t want a very bought RSI, in practice Bitcoin has been known to run for months on end with its RSI frequently overbought. RSI is an important indicator, but it works best paired with other indicators.
NOTE: There are some reasons to be bearish (the crosses are trying to kill the bear, implying the bear is-a-here). 2018’s overall chart has been rather bearish from most perspectives, this is at best another attempt to end that… it hasn’t happened yet!
NOTE: To see what I mean open up TradingView and add the indicators Bollinger Bands, Guppy MMA, and RSI. Use Google to better understand how these indicators work. In simple terms we want to see the blue lines go above the red lines on Guppy, the price stay above the middle black line on the bands, and high on RSI is overbought and low is oversold.