Market Commentary

Nothing really new happening in the BTC markets lately, as they remain in a medium term holding pattern, which is keeping price action muted. We believe that this gives us an opportunity to talk about what we think is going on with the hype coin of the week: Ripple.

First of all, we do not consider XRP to be a true cryptocurrency given its lack of a traditional blockchain and its centralized nature which is why we have never included it in our coverage universe. Secondly, this makes XRP easier to control and now that the banks are involved in, and perhaps in control of it, there is no surprise that it has been pumping so hard given the amount of capital and market expertise they possess overall. Lastly, given there hasn’t been a legitimate attack on bitcoin since the s2x failure in November (other than the rather weak BCH attempt) we think it is entirely possible that XRP is being used as a vehicle to create a short term FOMO-driven flipping, which will cause many newcomers to get upside down in their trades in that they are buying the top of the ripple pump and selling BTC to do so which gives the bankers a huge opportunity to accumulate more BTC at the expense of inexperienced traders. While we are not necessarily saying this is definitely happening or will be a bad thing in the long term, we just want to make our OBVIOUS Investments members aware of what we think and what we truly believe that makes sense in the broader crypto-sphere.

Another thing noting as we move into our trading activities in the beginning of January, is to remind everyone to prepare for the main focus of Q1, 2018 – the reemergence of the Chinese market.

Trade regulations have not yet been lifted, and the reentry of capital from the Chinese will most likely push us into the next major Bull run. Expect homegrown Chinese cryptocurrencies to go through the roof, as well as Bitcoin Cash contesting Bitcoin. Miners want to support a chain that is non Asic-resistant as any loss heavily cuts into their profits. Security vulnerabilities and recent hacks with Alipay and Wechat Pay have led the Bank of China to implement restrictions and regulations that will take full effect in April 2018, which has been used to promote adoption of BCH as a payment alternative.

The Chinese Government has approved a Sandbox plan (prepared by the ICO regulatory sandbox platform with the Guiyang province of China). This Sandbox plan includes a set of protective measures and will consist of a list of cryptos and ICOs that have gained government approval and are now allowed to be traded on exchanges. That means certain tokens will be assigned particular regions to operate from. Weeks ago, a considerable amount of the Western market was convinced NEO would be the only crypto allowed in China, as their marketing team actively attempted to push this narrative. Although we know this is far from the truth, NEP-5 tokens (similar to ERC-20 tokens but for NEO) still have a chance to be implemented as a mandatory standard platform for new ICOs. This, however, could be contested by the rise of other emerging token platforms (Skyledger, QRC-20).

Be careful out there, its still a jungle.

Week highlights


Bitcoin Market overview


It certainly appears as though Asia and Europe were actively buying bitcoin during the overnight hours considering we are waking up to prices that are over 16,000 $ for the first time since the end of December. This is likely due to a combination of positive technicals on pretty much all timeframes and a downdraft in some of the major altcoins that had been rallying hard lately, most notably XRP. While it is no surprise that price is finding some resistance around current levels (16k – 16.5k) for a variety of reasons, we don’t think any of them are convincing enough to derail what is becoming a strong push to the upside.

Bitcoin Technical analysis


We start today’s analysis with a look at the 4-hour chart for a more granular view of the short term setup and we can see that price has now pushed above the previously broken uptrend line on bright green SCMR signals and bullish candle formations. Also note that said trendline has already been tested and held, new dynamic support is building around the 14,192 $ local low, near term market structure remains favorable, the 50 SMA (top blue line) continues to steadily accelerate higher, and the EMA’s are heading back to the upside and are about to cross the still bullish 200 SMA (low blue line). On the other hand, price is butting up against significant resistance just overhead in the form of the lower supply area, the bottom of the OTE short zone, and historical dynamic resistance dots, any of which could put the brakes on the rally for the time being, although if the 16,480 $ level is broken higher at any point we will likely see a continuation up to at least the 17k region.

 

The BTCUSD daily chart continues to push higher into the lower supply area on a bright green SCMR signal, a bullish candle formation, and rapidly improving market structure. Also note that the EMA’s just crossed over to the upside, the 50 and 200 SMA’s both continue to rise in support of the uptrend, and the Ichimoku Cloud remains firmly bullish out in front of the market, which are all signs of a continuation higher in the not too distant future. Having said that, the same resistance patch we mentioned in the 4-hour analysis is lingering overhead here as well, and if we look closely at the current bottoming formation off of the trendline it looks like an Inverse Head & Shoulders may be a decent possibility which would imply a retracement back down into the 13,000 – 14,000 $ range before the real breakout to new ATH’s materializes (although there is still room to move higher before that retracement would need to begin).

As far as momentum and volume are concerned, the Stochastic is moving quickly up towards overbought territory however Willy and RSI both have plenty of room to run higher before being a concern at all. We can also see that MACD is just about to cross above its zeroline which could easily spark some extra algo buying, and PPO has only just now shifted from flashing strong buy signals to weak buy signals which is still a sign that there is room to run to the upside. Throw in the fact that the volume indications, particularly the A/D line, are starting to pick up steam once again, which is confirming that the bulls have regained control of the market, and we think higher prices are in the cards in the not too distant future

Bitcoin forecast


We must admit that we are rather surprised by how resilient the market has been this week given it is the first week of the new year following a massive rally over the past 12 months, in addition to the fact that major alt pumps were taking place that were garnering quite a bit of trader and media attention. Once again bitcoin exhibits its ability to cut through the noise and return to its natural state, one that only a truly deflationary currency/asset could achieve. Granted, the market does remain in a broad consolidation overall and could remain so for another few weeks, although right now it is looking like the bulls are getting antsy so we want to be ready for anything (either a selloff back down to 13 – 14k, a breakout above 17k).

 

Bitcoin trade ideas


  • Bitcoin Very Short Term (hours-days)
    • We will consider a LONG position on a pullback back down to the 14,800 – 15,700 $ area with a stop around the 14,500 $ level and a target of 17,600 $.
  • Bitcoin Short Term (days-weeks)
    • We will consider a LONG position on a retracement back down to the 12,800 – 13,750 $ area with a stop around the 13,500 $ level and a target of 19,000 $.
  • Bitcoin Medium Term (weeks-months)
    • (A) We will consider a LONG position on a selloff down to the 6000 – 6500 $ area with a stop around 5846 $ and a target of 20,500 $.
      r/r 19:1
    • (B) We will consider a LONG position on a selloff down to the 8500 – 9500 $ area with a stop around 8000 $ and a target of 20,500 $.
      r/r 8:1
  • Bitcoin Long Term (years) 
    • (A) We will consider a LONG position on a correction down to the 1000 – 2000 $ area with a stop around 890 $ and a target of 22,600 $.
      r/r 20:1
    • (B) We will consider a LONG position on a correction down to the 3000 – 4000 $ area with a stop around 2975 $ and a target of 22,600 $.
      r/r 18:1

Altcoins forecast & trade ideas


Go long on green zones (buy) / Go short on red/orange zones (sell). Blue dots are dynamic support zones, with high probably of an bear inversion. Red and purple dots are dynamic resistance zones, with a high probability of a bull inversion or pullback.

XMR/BTC – MONERO

ETH/BTC – ETHEREUM

ETC/BTC – ETHEREUM CLASSIC

XRP/BTC – RIPPLE

DSH/BTC – DASH

LTC/BTC – LITECOIN

 

 

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