As a Gann trader, I utilize the theories and methods of the great W.D. Gann. Gann was well ahead of his time in his analysis and approach to trading. When compared to the contemporaries of his day, Gann was not only better and more successful as a trader (we have real third party reports and witness to his trades – something not many old or new traders can or would admit to), but he was singularly distinct in his approach. Even today, almost 150 years since his birth and 64 years after Gann’s death, Gann remains singularly distinct in his approach.

Time is the reason for trend changes

Even among technical analysts, Gann is dismissed. Which is astonishing to me. The cause for the dismissal of Gann’s methods does make some sense though – it flies against the prevailing theories of finance and certainly against the prevailing theories of technical analysis. Gann said that time was the factor and reason for changes in trends. More than this, Gann approached the market as a natural phenomena.

Gann was man of devout faith and profound intellect. To him, his belief that God created everything meant that there was a strict order and logic to nature – a system that could never be altered by man. Without going into any further detail, Gann’s approach to the market is one that does not believe in randomness in the market. Every market is subject to a natural pattern that can not be altered by man. It is as natural and concrete as the rising and the setting of the sun. And that is my style of trading: a belief that markets are slaves to a pattern that can not be altered, that a chart is just a visual representation of a naturally occurring pattern in time.

And perhaps the most difficult thing for traders and analysts to grasp regarding Gann’s work is that news is irrelevant. It’s pointless. But let’s get to the point.

2018 by the numbers

Let’s breakdown some facts here of what happened during 2018 for Bitcoin and the cryptocurrency market as a whole. It was not a friendly one to traders and investors.

  • From the 2018 high of 17234.99 to the 2018 low of 3122.28, we see a massive -81.88% drop.
  • From when Bitcoin opened 2018 at 13880 and closed down at 3693.3 – that’s a -73.39% slaughter.
  • To make matters even worse, Bitcoin spent the past five consecutive months with closes below their monthly open (August 2018 – December 2018). That’s ugly.
  • There was only one month between August of 2018 and December of 2018 where there was even a monthly high that broke a prior month’s high, and that was in October of 2018.
  • Out of the entire 2018 calendar year, there were only 3 months that saw a close above their open – if we remove the * February 2018 candle from the equation (it closed and open around the same value area, opened at 10268 and closed at 10315), then we only had two months with closes greater than the open.
  • And counting the 22-weeks from August 2018 to the end of December 2018, there were only 8-weeks that had closes above their open, the only real bullish close being the week of December 17th 2018 which saw prices shoot up from 3280 to 4300.

What about 2019?

For fundamental traders and investors, there are some major catalysts to look for in 2019. First, the VanEck/SolidX BTC ETF will face its approval/disapproval in late February of 2019 (February 27th) – that’s the final delay for the SEC, they can’t push the date back any farther. The second important event will be the launch of the NASDAQ – Bakkt Bitcoin futures contract, this is pending approval of the CFTC (Commodity Futures Trading Commission). This Baakt futures contract is important because it will be a physical delivery futures contract – meaning that any futures contract held into the next quarter will be settled with the ownership of actual Bitcoin – not just a derivative.

2019 and into 2020 predictions and forecasts using Gann

Utilizing Gann’s methods – and without going into nitty gritty details – these are some of the following behaviors we should expect to see happen with cryptocurrencies in the future.

Predictions for December 2018 – mid-February 2019 – Continued and muted trading, definite rise off of extreme lows, but no wild pressure higher. The significant analysis of cryptomarkets that began with institutional investors will near completion and will yield a kind of ‘mob’ effect of investment professionals conclusions that cryptocurrencies are, in fact, an important, new and valid asset class with both a use and value basis. Price spike higher between February and Mid-March 2019.

Predictions for Mid-February 2019 – May 2019 – SEC will issue support for cryptocurrencies and a Bitcoin ETF – but with clear caveats and rules. Cryptocurrency enthusiasts who are attached to cryptos due to the political and idealistic reason for cryptocurrencies existence will not be happy with these limitations and constraints. In the meantime, the analysis and research completed by large investment entities and well-capitalized individuals will scramble to ‘be the first’ to create an ETP that will comply with the SEC’s new blessing. Or, the CFTC will take on the issue of cryptocurrencies. Equity markets begin recovery in early 2019 to reach new all-time highs. April 2019 – July 13th 2019 should yield the highest consecutive months of growth for cryptos in 2019.

Predictions for May 2019 – October 2019 – Expect similar price action to the time periods after the Mt. Gox 2013 highs and the 2017 highs – slow but persistent increases in value across the entire cryptocurrency market. There will be another ‘civil war’ in cryptocurrencies – with political ideologies competing against speculators and investors. The biggest wealth generators and ‘upper classes’ of emerging markets will become worried and flee to the West. Profit taking in cryptocurrency markets during the Summer of 2019.

Predictions for October 2019 – February 2020 – Equity markets (stock markets) should have been experiencing a massive rally throughout all of 2019, but a major disconnect is occurring between equity markets and growth outside of North America, Australia, and the EU. Traditional currencies will collapse, beginning with emerging markets – especially in South America. In Africa, the South African rand will be near complete collapse and may have totally collapsed. The Israeli shekel becomes increasingly important. China’s currency may also collapse, resulting in a legitimate panic phase in global markets in 2020. Here, cryptocurrencies become the worlds guardian angel for the common man – the way to buy and sell without worrying about any individual nations currency – portents of this began in Venezuela in 2017 and 2018. Cryptocurrencies will be solidified as an asset and security – possibly having as much security as gold.

Predictions for February 2020 – August 2020 – Currency collapses around the globe will solidify cryptos as the defacto way to purchase goods and services for nearly the entire planet – the US Dollar, Japanese Yen, British Pound, and Euro will remain as world governments and corporations will be slow to move from traditional sovereign fiat currencies. The Japanese may convert to a national cryptocurrency. The Israeli Shekel will increase in significance. Equity markets in a panic phase.