12/24/2017 The Market View and Trading Outlook

It has been a few days since I last posted a market analysis. Partly due to the fact that I have been testing other categories and types of postings, as well as there have been no significant market events that deviate from the last analysis I posted. To recap my last report, I stated I was going bearish, BTC price was walking a tight rope, would likely drop to the $10,000 level, Alts would follow downward BTC progress and I was going to trade the trends and wait it out.

https://steemit.com/bitcoin/@pawsdog/12-19-2017-the-market-view-and-trading-outlook

While the price has plummeted and retraced a few times in the past few days, we are not out of the woods yet. We also have another wrench that has been thrown into the works in the form of the surprise introduction of Bitcoin Cash to Coinbase.

Adopting a somewhat conspiracy theorist mindset, I think that there could be strategic motivations to the timing of the release based upon the buy sell cycles of BTC. We have known for a couple weeks now that BTC was on the verge of a correction. This is not me being a “guru” or pulling from the Sun Gods, this prediction was based on simple indicators, namely the level of divergence shown on the 1d, 3d and 1 week MACD, as well as the extreme overbought conditions for the same time frames on the Stoch RSI. This is no different from my personal prediction of the $5,000 to $3,000 drop a few months ago; the indicators for that time frame and this most recent one were essentially the same.

Back to being a conspiracy theorist; one thing I have noticed in regards to BTC is that anytime the charts and indicators tell us we are going to enter a correction, some major event will occur shortly after we enter it to push the price down further. In the drop from $5000 to $3000 we were trailing down towards a healthy correction on the 3 day time frame and then China started banning ICO’s which tanked the price over the course of a couple hours.

Then just as we were trying to dig our way out, Jamie Dimon of JPMorgan, starts calling Bitcoin a fraud etc. which again tanks the price. So we hit bottom, consolidated and according to the charts and indicators entered favorable territory for a recovery and began trending up. Then we get news that the JP Morgan is actually buying BTC, life is good again and Bitccoin goes on an insane run from $3,000 to nearly $20,000. In doing so it over extended itself from the moving averages and entered an extremely overbought condition and was demonstrating extreme divergence between the MACD and signal line indicative of another pull back/crash in the works.

Link: Guide to the MACD

As is a normal market cycle, this most recent correction began and was progressing naturally, no major crash, just a slow trend down toward the moving averages to shake out weak Hodlers. So what inevitably happens? Coinbase suddenly drops Bitcoin cash on the market, crashes BTC and news begins surfacing that Bitcoin Cash is the new Bitcoin and Bitcoin core sucks. Which remaining objective BTC does suck compared to BCC in terms of block size, speed and transaction prices. We also need to look back at when BCC first entered the market and Coinbase was totally against it, posting that they would not support it, they stood behind core etc.; my how quickly things change in the crypto market. As I have stated before infidelity is epidemic in crypto and big players and little players alike switch partners on a whim.

So what is my conspiracy theory? Perhaps, the timing of the Bitcoin Cash release directly as Bitcoin Core was entering a correction is a deliberate attempt to begin the process of a flippening. A process wherein Bitcoin Cash takes the lead and Bitcoin Core becomes the new litecoin to it or just dies off completely. Looking at it from an investment standpoint and my own recent usage habits, I have actually started using BCC more when going from one exchange to another, especially when transferring out of Coinbase to Bittrex, Kraken, Poloinex etc. It’s just faster and cheaper.

I can recall numerous times where I transferred BTC and had to wait 6 or more hours for the transaction to go through and got hit with a $20 or more fee to go along with it. When using my offline wallet to transfer BTC it was the same story, though I had the option of paying additional premium or express fee to hopefully have my BTC where it needed to go within the hour. I found this to be 50/50 at best in regards to beating the hour time frame. Since the introduction of BCC to Coinbase I have found myself using it to transfer as it tends to get where it needs to go in 45 minutes or less and its cheaper. I’m not pushing BCC by any means, but if you read my article:Is Bitcoin Dead

I am having an ever more difficult time finding the advantage that BTC has over BCC except decentralization. I would not be at all surprised if BIG Money is using this correction as an opportunity to cash out of BTC and will wait until the price is right and push BCC up to and past it. BTC will not die suddenly and it will be a death of 1000 cuts, as I think we will get at least one more good run out of BTC likely to $26,000, at which time BCC should be pushing $8000-$12,000 then BTC will correct and shed 50 percent or more again bringing it to $17,000, BCC will shed 25 percent or so increasing its BCC to BTC price. This will happen a few times until BCC begins to pull close and eventually takes the lead. Heck we had a high of $9500 for BCC on Coinbase and a low of $10,500 for BTC on the same platform close to the same time, so they are not all that far apart when you look at it from that perspective.

Moving on to the technical aspects and what the charts are saying (absent outside manipulation in regards to pumping a flippening). BTC is still correcting and will likely continue to do so for a while. The news according the charts is decidedly bearish. For the first time since the beginning of September the 12 hour MACD has crossed the zero line from above. When the MACD crosses the zero line from below, a new uptrend may be emerging. When the MACD crosses the zero line from above a new downtrend may be emerging. What also tends to happen is that the 0 line will serve as resistance to the upside. The 1 day has not crossed over yet, and it may bounce on the zero which would go back to what I discussed in a previous analysis in regards to BTC ranging up and down until the moving averages catch up and we shed the overbought conditions on the 3 day and 1 week Chart.

On a positive note we do have extreme divergence to the downside on the 12 hours, 1 day and 3 day which means one of two things. We are going to trade flat in these lower ranges for a while or range up and down until it cleans itself up. I am not expecting a major crash again today or tomorrow but am expecting this slow downward trend to continue with some sideways action and a couple failed rallies for a bit longer and likely into the new year.

Ethereum and Litecoin

I’m staying out of these for a bit, but may pick some up on major dips like I did at $155 a couple days ago. The market is somewhat volatile and it is too easy to get trapped in at a top on a quick reversal or get stuck trying to play pick the bottom. Basically I feel that while I would not lose any big trades as I cut my losses short I could see my capital at risk of death by 1000 cuts through many bad trades trying to play the range. I will wait until I see some positive action on the BTC 6 or 12 hour before I jump in and start trying to take people’s money. I am also going to keep watching these, more specifically there relationship to BTC and BCC over the next few months to see if I get any indication that they are beginning to favor on over the other which would be indicative of my wild conspiracy theory in regards to a flipping.

Previous Analysis:

https://steemit.com/bitcoin/@pawsdog/12-19-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/12-17-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/12-15-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/12-12-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/12-11-2017-the-market-view-and-trading-outlook