*I don’t trade cryptocurrencies. The best strategy for trading a crypto bubble is a classic trend following strategy.
Here’s the outlook for various cryptocurrencies based on the aforementioned strategy.
Discretionary outlook based on charts
- IOTA is stuck in a massive range.
- Dash’s range has become very narrow.
- Bitcoin Cash’s range continues to narrow
- Ethereum is retesting support. It’s uptrend is intact.
- Trend followers need to be careful with Ripple.
- Bitcoin is going to have a MASSIVE movement very soon.
2:53 pm. IOTA is stuck in a massive range.
Trend followers have no advantage in this market. This is a contrarian day trader‘s market. However, the next move (breakout) will be a big one.
2:45 pm. Dash’s range has become very narrow.
Dash’s chart looks very similar to Bitcoin Cash’s chart. Its range has become extremely narrow, which means that the next breakout/breakdown will be a big one. Neither bulls nor bears have an advantage here.
2:16 pm. Bitcoin Cash’s range is very narrow
Bitcoin Cash is now trading within an extremely narrow range. Expect a massive breakout or breakdown soon. The best course of action is to wait for the next movement. Trend followers should stay in cash.
10:42 am. Ethereum is retesting support
$1000 was a big resistance for Ethereum that many traders were watching. It has now broken above this resistance and is turning it into support. The uptrend is still intact.
10:27 am. Be careful with Ripple
It looks like Ripple’s strong uptrend may be over, and might be entering into a consolidation phase. Trend followers with tight moving stop losses should consider getting out. A close below its 9 ema is something that Ripple has never done before in this uptrend.
6:32 am. Bitcoin’s next move will be yuuuuuge.
I said that trend followers shouldn’t be too eager to jump into Bitcoin. They should wait until Bitcoin breaks above $20k.
There is a solid fundamental reason for this. Zerohedge states that some traders are building huge short positions against Bitcoin. No matter what happens, the next movement in Bitcoin will be huge. Either:
- Bitcoin will break above $20k, animal spirits will be reignited and all these shorts will be forced to cover their positions. The short covering alone will spark a massive rally.
- Bitcoin will break down below $10,000, and all the small mom-and-pop traders who quit their day jobs to trade crypto will dump their Bitcoin in a hurry. This will kill the Bitcoin bubble.
When a market crashes 50%, makes a 61.8% bounce, and then makes a new low, the bubble is over. Everyone hits the exit gate at the same time. You can see that Bitcoin’s previous “corrections” did not make a new low.
So either these Bitcoin shorts are very right (i.e. a massive crash is ahead), or they are very wrong and will be forced to short cover. Prudent trend followers should wait for the breakout/breakdown.