Cryptocurrencies on February 14, 2018: outlook

*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

  1. Don’t chase Bitcoin’s bounce. This is a standard 23.6% retracement.
  2. Ethereum is stronger than Bitcoin and Bitcoin Cash is weaker than Bitcoin

3:21 pm. Don’t chase Bitcoin’s bounce.
Bitcoin has bounced off of its 200 daily moving average and retraced 23.6% of its entire bear market decline.

Trend followers should not going long here.

  1. Bitcoin is at prior support ($9260), which has now become resistance.
  2. Bounces in bear markets (especially bear markets after bubbles) typically retrace 23.6%. So if Bitcoin’s bubble is over, then Bitcoin should not bounce much further.

The only way to know for sure if Bitcoin’s bubble is over is if Bitcoin doesn’t make a new all-time high. Hence, trend followers should only buy Bitcoin if it makes a new all-time high.
3:20 pm. Ethereum is stronger than Bitcoin. Bitcoin Cash is weaker than Bitcoin.
Ethereum has retraced more than 38.2% of its bear market decline. Bitcoin Cash has retraced less than 23.6%

If Bitcoin makes a new all-time high, then so will other cryptocurrencies. I think speculators should buy Ethereum. Its price action is the strongest out of these cryptocurrencies.
Read Cryptocurrencies on February 12, 2018.

2 comments add yours

    • For a trend following strategy, yes. You have no idea if this is just a bear market rally or if Bitcoin’s massive correction is over. Cryptocurrencies have zero fundamentals, so we can only use technicals.
      The only way to know is if Bitcoin makes a new all time high. A new all time high means that the bull market is back, and Bitcoin will soar much higher.
      You’ll make less money by using this strategy, but it’s a much safer way to trade an insanely volatile market.

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