Since 13 November 2018, Bitcoin has lost 48%, Ripple has lost 43% and Ethereum has fallen by 54%. All three coins staged a textbook, a bearish volatility (daily basis) on November 14, along with dozens of other coins. Are these big coins with market capitalization approaching the main lows of the cycle? Is there a rational technical basis to believe that the worst of the 2018 crypto-bear market is coming to an end? Examine the key cryptographic cycles and key levels for each currency and reach its conclusions.
Technicals vs. Fundamentals
Remember that the technical charts of a currency and the underlying fundamentals can paint completely different frameworks for potential traders and investors. For example, Bitcoin's fundamentals seem to be excellent (looking forward to three, five or even ten years), but this may not be reason enough for a short-term swing trader to go to long BTCUSD at the moment. The same could be said for Ripple (XRPUSD) and perhaps also for Ethereum (ETHUSD). In this article, the focus is on technical aspects, not on fundamentals.
Crypto Picture cycles and key levels
Each cryptocurrency moves in cycles of repetitive prices. In fact, every imaginable period of time has a price cycle. Even three or five minute intraday charts have negotiable cycles. Identifying future convergences of lows (or maxima) to multiple loops can give you a powerful encryption advantage. Here are three low-projection multicopy charts for BTCUSD, XRPUSD, and ETHUSD. These are the cryptos with the largest capitalization and also act as general time proxies for smaller coins.
Take a look at the chart of the weekly Bitcoin cycles:
Bitcoin offers the most historical data, which means that its cycle timing data is more reliable than most other coins. The graph reveals that an attempt at forming a high probability multicopy is low. The 72-day, 21-week and 41-week cycles are all agreed that an important minimum is close. At the same time, the 18-month cycle suggests that the next major minimum will occur in the fall of 2019.
Does this mean that it is safe to go along Bitcoin right now? Could be. Maybe not. Cycle lengths are always subject to random expansions and contractions, although most markets have an average cycle time of 18-20 years (measured from valley to valley). The key word here is average. Some cycles may end after only 13 bars. Yet others can expand to 22 or even 25 bars. Long term, you can expect that the average duration of the cycle always returns to the average of 18-20 bar. Cryptographic cycle analysis is effective on price, volume and tick charts.
Key support and resistance for Bitcoin
A good rule of thumb is to look for a basic agreement between three or four key cycles. If there is a low cycle agreement is the price is traded just above an important level of support, the odds of an increase in tradable bullish inversion. In the case of Bitcoin, the price started to fall near a key support level (based on the September minimum swing of 2,979.88). At the time of writing this article (December 17), Bitcoin is mobilizing, perhaps demonstrating the correct analysis above.
However, there is a good chance that the currency will try to repeat the recent weekly minimum test at 3,169.53 before attempting to rise higher. So be quick with profit if you're a short term trader. Notable supply areas (profit-taking areas) exist near 4,200.00 to 4,300.00 and then on close 5,800.00 to 5,900.00.
Ripple's price action is a bit more erratic than Bitcoin's, but its cycle prediction still sounds very interesting. Ripple is also very strong (seventeenth), following the command of Bitcoin. The three-day chart produced the most logical set of low-cycle forecasts and suggests that at the end of December 2018 at the end of January 2019 it is the time window in which the minimum appears. Perhaps the final minimum had already been made (last week at 0.2815). The key cycle lengths for Ripple are 35 days, 70 days and 20 weeks (basis of the 3 day chart).
Key support and resistance for ripple
However, Ripple could rally a little and then retreat to repeat the test on that low level before turning back to 0.3000. The low swing at 0.2815 was lower than those seen in August and September 2018, and this is an important bullish signal for Ripple. A series of highest highs and lows is the proof of a bull market, so at least the lower part of the formula is in force.
For Ripple to really attract fresh money, look for a daily close above 0.4042 and then 0.5669. A potential close above 0.5669 would confirm a bull market (swing seesaw and base of low fluctuations) in this currency. The price will have to chew through a significant supply (traders are trying to sell soon) at levels from 0.4700 to 0.5000, so it could be a big gain zone if you long ripple.
Ethereum's long-term price action is decidedly bearish, having traced 95 percent of its extraordinary 2017 rally. Its small-priced (base, 2-day chart) bars were bleeding more and more at the bottom with a rebound. Until today, December 17th. Ethereum is gathering together with Bitcoin, Ripple and the rest of the crypto market.
The ETHUSD price cycle forecasts suggest that its last multicyclic minimum is due in January 2019. At that time, its 33- and 64-day cycles, along with the 18-week cycle, should all reach the bottom simultaneously. Note that its 34-week cycle (semicircle) projection is already growing, so if you see ETHUSD making a strong bullish reversal in January 2019, there may be a significant upside available.
Key support and resistance for Ethereum
Of the three coins analyzed here, Ethereum is in the worst technical conditions. The next significant level of support is far below the current price of 94.70. It fell to 40.99, which is the minimum swing of April 2017. Yes, last week's low at 82.05 could offer support on a possible withdrawal and test again, but if that level fails quickly, look for ETHUSD to attract many short sellers. On the top side, there is plenty of offer (potential sales pressure) around the area from 110.00 to 120.00. It would be an excellent place to book swing trading earnings if you're already along Ethereum.
There are two other important things you need to be aware of:
- The Federal Reserve continues to drain liquidity from the US financial system, and at an increasing rate.
- All major US equity indices present monthly downward cycle forecasts. 2019 could be a bad year for US equity returns.
Of course, many cryptographic operations take place outside the United States, but the constant emptying of the coin by the Fed, however, leaves less money in circulation for speculative purposes. Since most cryptographic activity is linked to speculation rather than transaction (at least now), it may take some time for cryptography markets to experience something like the extraordinary rally of 2015-2017 again.
Therefore, you may wish to be more cautious with your crypto-profit targets throughout 2019. A financial system with less liquidity means market upside could be limited and sales could be more brutal. Panic securities traders may need to collect liquidity, liquidating their cryptic long-term, otherwise valid, thus keeping control over crypto-chronic.
A wise interpretation of cryptographic cycles and the main levels of support and resistance can help you achieve a margin of investment and investment in 2019 and beyond.