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
- Don’t chase Bitcoin’s bounce. This is a standard 23.6% retracement.
- 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.
- Bitcoin is at prior support ($9260), which has now become resistance.
- 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.
So buy only AFTER it hits ATH? I’m so confused by that.
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.