*I don’t trade cryptocurrencies. The best strategy for trading a crypto bubble is a classic trend following strategy.
Here’s my outlook for various cryptocurrencies based on the aforementioned strategy.
Discretionary outlook based on charts
- Litecoin’s bounce is extremely weak.
- Ripple retraced 23.6%. Still making lower highs and lower lows.
- Bitcoin Cash is turning prior support into resistance
- Bitcoin is making very standard lower highs and lower lows.
- Ethereum’s price action is the strongest out of all the cryptocurrencies.
5:08 pm. Litecoin’s bounce is extremely weak.
Litecoin is the weakest out of the major alt-coins. Its bounce did not even retrace 23.6%. Litecoin is stuck in a bearish pattern of lower highs and lower lows.
5:05 pm. Ripple retraced 23.6%. Still making lower highs and lower lows.
Ripple’s pattern is still bearish. A 23.6% retracement is very standard for bounces within bear markets. Trend followers should avoid Ripple.
11:45 am. Bitcoin Cash is turning prior support into resistance
Bitcoin Cash is an interesting cryptocurrency. Bitcoin Cash likes to move in a “staircase pattern”.
- On the way up during the bubble: Bitcoin Cash spikes, consolidates, spikes, consolidates.
- On the way down post-bubble: Bitcoin Cash crashes, consolidates, crashes, consolidates.
Bitcoin Cash is currently in the consolidation phase. It has turned prior support into resistance. Bearish. Trend followers shouldn’t buy Bitcoin Cash.
11:39 am. Bitcoin is making very standard lower highs and lower lows.
Bitcoin’s recent bounce seems big (as a percentage). But when you look at a daily bar chart, you realize that this bounce looks just like all the rest of Bitcoin’s bounces since it topped at $20,000. Bitcoin is still stuck in a pattern of lower highs and lower lows, with very weak bounces in between.
Bitcoin’s recent bounce almost retraced 23.6% of the entire decline. Some traders expect a retracement to 38.2% ($11,200) before Bitcoin rolls over and makes new lows.
11:38 am. Ethereum is being dragged down by other cryptocurrencies
Ethereum’s price action is still the strongest out of all the cryptocurrencies. Unfortunately, Ethereum is being dragged down by Bitcoin and other cryptocurrencies. It is making lower highs and lower lows. This is a bearish pattern. Trend followers should avoid Ethereum unless it makes a new all-time high.
The bottom line is simple: trend followers should not buy Bitcoin.
Read Cryptocurrencies on February 8, 2018.