Elliot Wave and Cryptos
This is mainly posted for aagent because he asked about the validity of elliot wave in trading cryptos. This is a copy of a post I made as part of a larger discussion on cryptos that occurred in the online community Elliotwavetrader. At the writing we had gone from 3 of us trading Ether on the site to abut 20-30 folks. More keep coming..
There is some insider language, like the 'IPO pattern' which refers to an EW that is common among early stocks.
The point here is that I don't question elliot wave and cryptos. Elliot wave even works in the housing market!!! It is more of a social exercise, that helps one see the cycles of sentiment in the markets. But each market has its nuance and you must become skilled practitioner of the basics before you can develop that nuance. I am only 2+ years in....
-Beginning of Repost-
I have been asked a few times over the last couple days if I think ETHUSD is going to see $27 as I've believed. But before answering that, I wanted to share a few things I've learned from combining EW (a two year affair) with crytpos (18 month affair). I'll talk about $27 in replies. Sorry I'm feeling kinda wordy tonight. Must be the beer.
What I've learned:
In cryptos we're dealing with huge ranges, therefore:
a) Either use log fibs or get used to a language of 'super extensions' off the 1-2's (3.618, 4.0, etc etc) But I've found use log calculations gets me some pretty accurate targets based on normal fib pinball structures.
b) If you don't watch the micro setups, even while looking at the larger targets, you can lose some serious coin (pun intended).Many coins and tokens begin life in corrective waves (like the IPO pattern in equities), and sometimes they stay there for a while, (eg LTC). This makes me very skeptical of chasing spikes until they have a manageable impulsive structure. Note my language 'corrective' refers to structure not magnitude. Chasing a corrective spike even if high magnitude can result in harm regardless of its dizzying heights reached.
Cryptos have forced me to get better at reading techs/internals because they often ramp out of crappy price structures and even more so if there is an underlying bullish price trend at one higher degree.
Shallow retraces (even .264), triangles, and extended fives, and diagonals abound, more so then equities and even commodities in my short experience trading these markets.
Because of the non-standard retraces so common, actually marking what degree you are in is difficult because you don't often get that proper .618 retrace to market your 1-2.
Trading cryptos have actually helped me trade equities, options, and futures better.
Hopefully that will be helpful with for discussion on the magic $27 number.
I remember when you posted this in the room RW...seems like forever ago...crypto time is double dog years!
LOL
Your post makes me feel better about frustrations with EW and the crypto market. Not to mention the crazy amount of disparity of highs/lows between exchanges, and divergences between LTC and BTC, ETH and ETC (I think that deserves its own post altogether). But when you nail a C wave, it is very monetarily rewarding. I remember finally getting a clear wave structure (3 to the 1.618 with a pullback to the 1.0 for a 4). I just entered and set my stop near the 2.0 and enjoyed the night with friends... come back to find it executed. That hasn't happened in the past week though, but I'm ready for the C wave down to start in earnest soon.
Thanks for your commentary!
I really appreciate you posting in Steemit. I love your accuracy and would love to study to be able to understand you more. Which learning resources do you recommend for someone who knows the basics of TA and wants to enter into EW?
p0o- I really recommend reading Robert Prechters book on the EW principle as a starter. But he's really not a great trader and won't teach you how to (even if you join his site) But he broke down the principle quite well and is a decent writer. Then I advise joining elliotwavetrader. Yes, it's money but you'll make it back. True, there are only 20 of us trading cyrptos but that may change. I am a paid member. There is a chance I might become a paid analyst for now I pay and can't speak well enough of the place. Hate to sound like an advertisement but I owe a lot to the place. Full of professionals in the equity place. And, all is applicable to cryptos if you learn the nuance difference.
Also, there is a 15 day trial, so you can just check it out no questions asked.
So about that ETHUSD pullback to $27... :-)
Does this breakout in the cryptos negate the potential for such a pullback now? Hard to call ETHUSD in a B wave up now (not sure if that was your count or not, but I'm assuming that based on your last BTCUSD post, which I know had a stop at $2700).
I'm in quite a quandary because I see that the B wave top/5th wave should be ending any day now, so I hate to go long, but I'm also tired of having to cover my shorts. ETCUSD still has a valid B wave top on May 30-31, taking its time to complete a confusing 2 back of the C wave down (the "c" wave of the 2 back is overlapping badly). Any thoughts?
It is possible if we are now in the final stage of 1 of a large iii, which is my preferred. The move from $21 to $5 was ii. Now in iii, but only the first sub wave. But cryptos give shallow retraces and getting to $27 which is a full retrace is unlikely. So possible not probable. But WAY before that, we'd see the structure that will bring us there. Regardless, we appear to have the setup that will take Ether into the $1000's long term EVEN if we visit $27. I personally would love $27 to really load up the truck. Not likely.
Goodness! That would be a monstrously bullish chart! I suppose it is monstrously bullish either way. ETH had too much overlap for my tastes in the last pullback to be considered 5 down. ETC/USD holding its five down (now in C wave of 2, or c wave of iv of 1) and I'm still holding that one short. Thanks for you the reply!
I believe ETC will hit $40 before a larger drop, but the last drop, although I personally called the turn in the micro structure after seeing enough of the structure, it did not hold where I wanted it to on the longer time frame so you might be right. I think being short any crypto right now is hard, so just be careful. I have this larger $40 target show up on the larger timeframe so watching for a breakout, but I personally have no position right now due to its overlap.
Thanks for this @wildtrader and apologies for the late response. Crazy couple of days at work and in the cryptomarket.
I'm a fan of EWT and have trialed the service, and follow Avi and crew. Mainly for PM's. My concern is this market is decentralized and relatively unmanipulated compared to the stock market, housing market, commodities market, etc. It seems like EWT has enough experience to predict and forecast moves that these players will make in the traditional markets based off technicals and certain indicators, but we don't have these players in this market currently. There are no HFT, market makers, pension funds, options contracts, as well as shady banks, central banks, and dark pools to prop up certain markets.
Without any of these major players, and having a relatively miniscule market that is on the precipice of explosion (or we can say is already exploding with massive adoption), exchanges running out of bandwidth to handle new customers, just makes me think that we're in the wild wild west. Day trading seems to work better than swing trading. If you can't day trade, buying and holding seems to be a great option as well.
Most of my trading is swing. Or, I'd define that way. 2-3 week positions. I'm only now starting to buy and hold.
Thanks for this very informative for me article. I love the cryptos and the metals. I spent several hours putting this mining stock investigation together. I hope you find it of value. I think silver and gold may be ready to start moving up again very soon. This is an article I wrote breaking down some mining companies, the better of which should outperform the metals themselves by a wide margin. https://steemit.com/money/@motowngold/i-think-gold-and-silver-are-staging-for-a-run-here-are-some-mining-stock-ideas
Thanks for the info. I'll have a read. I'd be curious. I also trade Gold futures and GDX options. I have a few miners in my portfolio. I don't trade fundamentals in anyway. They just don't offer a way to time. Although as you know I trade elliot waves and I am somewhat studied Hurst cycles. Both are predicting a multi-decade rally in metals. Most likely it started in Dec 2015-Jan 2016
As you can probably tell, I am more of a fundamentalist, but I check the T/A as well. I think both have their place, but I do not trade that often. I am more of a long term positioner. I like to identify a likely long term trend, get positioned ,and then just stay there. Right now, this is what the cryptos and metals tell me I should be in.
Cool. I used to trade both. But learned that if I directly focus on what the market is actually doing, I cleared my head of the noise. Fundamentals often kept me out of great trades. Granted there is often a fundamental reason, but sometimes not...eg. TSLA is one of my biggest call options trades this year with dismal fundamentals. Sure there's promise, but crappy financials. I also learned forensic accounting to a degree in my MBA so no crappy financials when I see it. But I'm curious with respect to Crypto's. how do you value them? Valution is a black box. I am familiar with many models and few agree....
Well, that is a tough one, but I look at a simple very rough model for myself being a good part of what got me interested in my starting point, bitcoin. If they were to become widely used, and if there is only 21 million ever to be created, and if the smallest increment is 1/100 millionth, and if that increment were to equal a penny, than 1 bitcoin would be worth 1 million dollars. This very crude equation showed me the potential , if that makes any sense to anyone but me, lol!!