In the past, we have looked at a few cryptocurrency charts like EOS, Stellar and Ethereum. To be honest, they have been a bit frustrating at times, as the momentum seems to lose steam quite quickly. There are many that would put crypto together with precious metals as a safe haven asset. Well, the cryptos have not really followed Gold and Silver’s lead on the way up. They do not tend to move together. However, technicals seem to work much better for the cryptocurrency market for whatever reason. Ethereum was the chart I posted a few weeks back as its basing pattern and breakout is similar to trades we took in Gold, Silver, GDX, GDXJ, EAS, NXS and a few others. A nice downtrend, with a long basing pattern, before breaking above the resistance/flip zone and beginning a new uptrend with higher lows and higher highs going forward. Here is a zoomed out chart to refresh your memory on the pattern and why I like it.
Once Ethereum broke above the 360 zone, resistance now becomes support, and it is common, and in fact desired, to see price retrace or pullback and retest this zone before continuing higher. Something I really wish to see in some equity indices particularly the S&P 500, but that will be for another post.
As you can see from the chart, after we popped, the price did not carry momentum and fell back to the 360 support. I warned our followers over on the Equity Guru Discord Channel about this pullback down to support. This was a key zone to watch for a break…which may have meant that the crypto push had to wait a little longer, or an opportunity for an entry with this zone holding.
No surprise from the chart: it held. In fact, it broke over previous recent highs at 440 and closed above, which means that we have our FIRST higher low confirmed in a new uptrend. This higher low comes in at the 360 zone. A reminder, but a higher low is confirmed once a new higher high is created. Yes, one can front run this happening and enter a position before (such as at support), but your probabilities of success increase when the swing is confirmed which happened yesterday.
Today, price is now retreating but you can see the body close is currently being held ABOVE the 440 level. Price is now retesting this breakout. What is the target for the upside? I see 600 in the cards for Ethereum.
In other crazy news, the most expensive cryptocurrency is YFI (Yearn Finance), which hit a peak of $39,898 per token and a market cap of 1 Billion. A rise of 75% in one day, even when the founder, Andre Cronje, has said the tokens are worthless.
YFI has had a meteoric rise since July, and many are saying the crypto market is back. It is tough to say that cryptos have value. Many say it will be used as cash and currency, but still continue to trade or invest in them with the goal of cashing them out for fiat down the line. There is also the issue of the crypto exchanges not being regulated, which means if Bitcoin and other cryptos do skyrocket and people rush to take profits, it is highly likely the exchanges will not have the money to pay out. They don’t need to.
However, I think there is a bullish case for crypto, and advise my followers to hold some. Why? I think the play will be to be out of fiat. Central banks are devaluing to create inflation, and I think anything other than fiat is the place to be, which includes crypto. Generally, the inflation play is to be in hard assets/commodities which I do think are going to do superbly well for us.
Another chart of interest for me is Stellar Lumen. It has been another chart given to our discord members. Frustrating as XLM broke out but did not carry any momentum forward. We are now back at the support zone which can be a good entry.
Trade ideas and market discussion can be found on our Public Discord Channel: https://discord.gg/akcgCVP
Check out and subscribe to our Youtube channel where charts and market events are discussed on our Morning Market Moment show: https://www.youtube.com/channel/UCG7ZYDUeNANJiDxH88F9aQA