Monday's report outlined our plans and expectations for price action this week, so far you are not disappointed if you closed long positions and went short in the assets we outlined. I went in this week with no swing holdings. The exception to this has been Ripple (I'll get to that in a minute). The entire Crypto environment seems to be indecisive, but some kind of catalyst could help push things where they want to go. The leader of this festival is obviously Bitcoin, which appears to be forming a crown reversal on multiple time-frames (see Bitcoin's BiG Crown Reversal? What's a Crown Reversal?).
Turns out the rising wedge and the extension prompted a reversal, which I expect will form a potential "mini" crown reversal on the small time-frame. The plan is to expect the downturn to continue until we see a completion of the mini center crown. Then, we might have the chance to open a short "scalp" swing trade.
If you have shorts open, this may well take our trades into the weekend. From here, if we get the formation of a higher high and break out of the downtrend channel to the upside, we close out shorts or get stopped out, and then reevaluate. Currently we can see two structures:
A potentially bigger rising wedge:
And a head and shoulders formation:
DON'T FORGET it looks like we are forming the top of the "sub-right" crown of the larger sub-crown reversal on the 4HR, so even if we continue higher with the rising wedge or the h&s formation never completes the right shoulder we need to be cautions. Plus a larger rising wedge as a harmonics pattern means there is huge shorting potential.
Fibonacci levels to watch at the moment:
Updates can be found at Trading View -> HERE
I opened a short trade a few days ago as we broke out to the downside of the rising wedge I noted on Monday. I am going to let this ride, even if I get stopped out. My target is the trading range support down below, for now.
Since this asset came on the market at Bitfinex in August, its been outperforming Bitcoin (both on the long and short side). The volatility here is huge, so you don't want to get caught on the wrong side of the trade, but so far its been following the BTCUSD chart rather closely. The market history is tiny, but this strategy has been hugely successful (maybe I'll expand on this soon in a dedicated post). Why open trades in BTCUSD if you have a coin that is following the pattern and outperforming?
Currently it looks like we are forming the right crown of the entire reversal, so this downward pressure is not surprising. Especially since BTC is forming a similar pattern.
We broke out of the descending channel so WATCH THE BULLISH DIVERGENCE ON THE RSI IN THE 1HR!
Another trick I use to trade cryptos is to see how they are performing against BTC and what kind of patterns they are creating in those charts:
Clearly we have some weakness trading below the uptrend line and the major fibo support. However, we can see bullish divergence in the RSI.
Key levels to watch:
Updates can be found at Trading View -> HERE
On Monday I showed the trade open in the BCHUSD pair, as the price could not make it above two strong fibo resistance zones. So far so good... We broke the sub-key fibo ($396), which was right below the end of a long box. As anticipated, this forced a breakout to the downside. The next level to watch is where we are now, $358 - the end of another long box. This level is near the uptrend line and coincides with the high formed by wave 1 back in August (wave 1 support level).
Keep this chart in mind:
We are trading near the same fibo level as the last time we took off hard. The difference here, though, is that we are trading below it and it is acting as resistance.
Key levels to watch are:
Updates can be found at Trading View -> HERE
Ripple did not wait for anyone this week :) It managed to get above a local 0.382 and push up over a sub-key fibo resistance level at $0.205. It reached the target I set out in Monday's report of $0.24. I was thinking we would see a dip to a long box area prior to, but that did not happen. Oh well!
There is huge resistance ahead, so I think this rally will stagnate and visit the long box with a support price of 0.17 cents.
Key levels to watch to the upside:
Levels to watch to the downside:
Updates can be found at Trading View -> HERE
See you Monday and GLWT!
Erik.
