Posted at 15:43h
Let's focus on the action of the last week to understand the current sentiment of the market. ...
Posted at 11:56h
In January 2020 I made a forecast for Tesla stock which you can check here. The share price was around 524 USD then.
The January forecast is displayed in the chart above.
And here you see the actual market state, up to early June 2020. On...
Posted at 13:05h
In this review, we will talk about the Bitcoin market, and we will start this overview with the concept of bars with small volumes. Bars with a small volume attract less attention. Usually the public focuses on high-active-bars, which have high and extremely high volume....
Posted at 12:52h
As you can see, this market has been developing in a stable growing trend, which began in the second half of 2013. The start of uptrend occurred on the background of extremely high volumes that can be interpreted as the activity of institutional interests that...
Posted at 10:06h
I often make long-term forecasts for currency pairs but it’s been a long time since I analysed the euro. I’m going to correct it in this analysis.
Because EURUSD mostly trades in price channels on large time frames, analysing trading channels first would be wise. I’ve...
Posted at 23:58h
In my previous analytical article I started busting the current market myths and promised to make a forecast for Bitcoin before and after halving.
I’ve been dealing with cryptocurrencies for many years already and I know how a big player usually behaves. The first thing a...
Posted at 23:27h
My previous Bitcoin forecast was made on 22th March. And it was absolutely correct, until lately.
My March’s scenario is shown in the chart above. I predicted a high probability of retracement within a 5-wave structure in wave C. The target was at around 6,000-7,000 USD. Then I expected a fall to 1,500 USD.
The scenario was pessimistic, but it seemed to be realistic amid those panics and unfolding crisis.
The current situation is shown in the chart above. As we see, the things had been developing according to the forecast. Then there happened a sharp growth in buyers’ activity while we expected a reversal and retest of support levels.
The daily chart shows that an ascending bearish wedge was forming from mid-March to almost the end of April. It’s a classic trend continuation figure and it pointed to a movement to 4,000 USD at least. At the same time, Tom DeMark’s oscillator showed a bearish divergence. So, my global scenario was fully confirmed on shorter time frames. All indicated that the bullish correction was about to finish and the price would continue to go down.
However, the market disagreed with me and went up instead of producing a downward impulse at 1,000 USD. That movement broke the whole wave pattern. The 20% growth was significant and occurred exactly where it wasn’t supposed to. That was an obvious market anomaly. Delving into its causes, I found a few delusions the crowd believed in.
Myth no 1. Dollar’s devaluation
The chart above shows a one-month time frame of the dollar index DXY which reflects the dollar’s value relative to a basket of 6 foreign currencies. As we see from a superficial visual and trend analysis, the USD didn’t collapse and no devaluation is forecast. What’s more, growth is even likelier than a fall, according to trends and the upward impulse. Fundamental factors explain that too: the US dollar remains the world’s main reserve currency. US treasury bonds are a popular protective asset, so the dollar will be demanded too as a means to buy them.
At the same time, credit money supply will implode since the bank sector isn’t active. Newly printed dollars will compensate for the reduction and bring back liquidity to the bank sector. Those who are shouting about money bubbles simply don’t understand economic laws. So, the dollar won’t devalue in the nearest future and will still be highly demanded.
Myth no 2: Halving will make Bitcoin prices soar
People are manipulated easily when they are stressed: rational thinking gets deactivated. That helped manipulators to promote both myth no 1 and myth no 2. A beginning of a new growth wave has been discussed since the end of 2019 amid information on future halving.
However, most participants weren’t too active and the price didn’t soar. After 2-month procrastination, a chilling collapse followed. Adequate reasons haven’t been found yet. However, the answer lies on the surface. Manipulators understood that halving was a mediocre news hook which wouldn’t boost a craze for crypto. Then they made the rate collapse to rebuy crypto at a new trough level and strip weak players of their bitcoins. Amid the current global crisis, the story about halving is relevant again and urges average traders to buy Bitcoins, increasing over-demand even more.
Many large media platforms launched a halving countdown timer, heating the fever around this event. Every marketing expert knows this trick and uses it in sales for heating demand for products and provoking fear of missing out. A Bitcoin buyer might even not know what halving is. But if we look into it, we’ll see it can’t have any impact on the growth of Bitcoin prices. Halving means that mining profits are cut twice: Bitcoin miners will get the reward for mining a block cut in half. It means many miners will leave the market as Bitcoin mining won’t be profitable at current prices.
Some may say that emission of new bitcoins will be cut in half as well. This counterargument makes no sense because the final emission amount has already been reflected in the price and was known long ago. For your reference, the maximum number of Bitcoins equals 21,000,000. What’s more, halving is what Satoshi Nakamoto, the creator of Bitcoin, is criticized for. If demand for Bitcoin and its price aren’t growing, halving will become a self-destruction mechanism because miners will no longer want to maintain Bitcoin’s blockchain.
Also, there are charts where previous halving is marked and which forecast that the price will continue growing after halving. Halving has occurred 2 times in the history of Bitcoin so far, and it would be statistically incorrect to try finding regularities based on just 2 cases.
If we attempt to understand why the price behaved that way, we’ll see that most traders in the young cryptomarket didn’t know what effects halving would have and how the price would behave. So, they were simply watching the situation and the price was standing still. Once halving took place, everyone understood nothing serious happened. So those who wanted to buy did what they wanted. Accumulation of buyers’ energy under low volumes in a bullish market of Bitcoin did what it was supposed to do: result in an explosive growth.
The current behaviour of market participants (see chart above) shows that roaring demand for bitcoin started before halving. It’s “buying the rumour”. Every experienced trader will say: “buy the rumour, sell the news”. So, it would be naive to expect that the Bitcoin price will soar after halving. Check my next article and read about Bitcoin’s actual scenario and what will be after halving.
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I’d like to remind you that all materials are provided for educational purposes only. They aren’t financial advice and don’t guarantee any profits. All trading decisions you make are your responsibility only.
Analysis, fundamental preconditions, possible scenario
We witnessed a historic event yesterday no one could imagine – the WTI oil price dropped below zero. It means producers paid buyers to take oil off their hands. Just imagine: you go shopping, you take your goods and the seller...
Posted at 17:55h
, Trading Tips
In this article, I would like to analyze the daily chart of the GBPJPY currency pair. The markup is very simple - at the top, you see a red line, this is a long term resistance level. I also built three blue wavy lines. The...
Posted at 20:40h
We’ve become witnesses to an unfolding international crisis. Still, not everyone is equally affected, even with globalization considered. Obviously, those countries that managed to escape the pandemic and whose economies are less dependent on global production chains are the gainers.
Amid the unfolding tragedy,...
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