There is an inherent danger to one’s ego and reputation with forecasting. Forecasting moves in any financial market does take a long time to study and an even longer time to make sure you ‘check your bias’ at the door. The greatest danger to forecasting is when you have a position already and/or a bias going into your forecasting analysis. After a lengthily enough time, you are as fine with your forecasts coming true as you are with them not coming true (the latter of which is more common than the former). For over a week I have been discussing a singular bias towards the forecasted moves coming in Bitcoin, Ethereum, Litecoin and the entire cryptocurrency asset class.
I need to, again, preface my analysis with a quick explanation of my style and approach to the market: Gann Analysis. William Delbert Gann was one of the fathers of technical analysis and probably the greatest trader who ever lived. His trades and positive expectancy rate are almost comical if they weren’t recorded by multiple newspapers and financial periodicals of his day. Adjusted for inflation, his winnings were well over 1.2 billion. And his winning percentage? Upper 80%. Gann told us everything (directly and indirectly) about the tools he used to become successful. He told us what they were but not how to apply them. What is most important about his approach is his belief that time is the catalyst for everything, all Creation is a slave to time.
One of the principles of this approach requires the trader/analyst to view things like war, politicians, current events, natural disasters, human activity, etc is irrelevant to the market. Time is the reason for price movement. Events like the news are merely the results of time, they are reactions to time. Honestly, wrap your head around that if you can. If you can’t, put on your tinfoil hat and dig out the chicken bones and voodoo dolls. I know what that sounds like. My point is that if we apply Gann’s approach as close to how he did it, we can know not only the date range of where a reversal will happen but how far that move may go and what direction. We know before time makes its own move. The moves in Bitcoin that have been bullish lately, have been devoid of any real bullish sentiment to keep prices above $10,000. Gann stated that prices will generally begin to move to the properly forecasted range before any fundamental news comes out. So the move we see now on Bitcoin started before we heard about Robinhood making crypto trading available soon on their app or the bullish news for the previously bankrupt 50 Cent who forgot he had a stash of Bitcoin that is now worth millions, great article by our own Amanda Razani.
Yesterday, I wrote that we need to observe the entire financial markets, especially those outside of Bitcoin. There is a dangerous convergence of time cycles in every single market. The move and shift of these markets have started already. Major reversal should be starting in all trending markets.
The Nasdaq, clear institutional sell-off.
The S&P 500, clear institutional sell-off.
The Dollar Index, clear rebound off multiyear lows, extreme bullish movement.
The Kiwi (New Zealand Dollar/US Dollar), clear reversal and sell off.
The Euro/US Dollar, clear reversal and sell off.
Gold, monstrous sell-off.
Where are cryptocurrencies going? They have yet to make their move. Bitcoin, Litecoin, and Ethereum are all coiled and ready. They’ve been forming a base and consolidating for over 20 days. When a flight of capital from traditional speculative markets causes panic, we should expect to see enormous capital inflows to cryptocurrencies.
And when that capital comes back into Bitcoin and the rest of the cryptocurrency asset class, it should be a dramatic rise.
Of course, I could be wrong and everything could go back to where it was and go even higher/lower than they were before! But based on Gann’s analysis and his principles, the probabilities of continuations in these trends are small when compared to the massive countertrend signals that are coming very, very soon.
It is entirely possible that when I wake up at 5 AM CST tomorrow morning, there will be some scary moves in some of these markets.