Highlighting what went right, and what went wrong, in this week's crypto price analysis.
Cryptocurrencies are all still stuck in a reversing head and shoulders pattern as the bearish second quarter of 2018 inches into the third. However, as Bitcoin and other cryptocurrencies are approaching their YTD lows, strong industry tailwinds will bring fuel to a long-awaited bull market fire.
Square, the payments processor and P2P payments app, reported a Q2 2018 100% increase in its BTC payments profit compared to Q1 2018. This is a strong indicator for public use of bitcoin payments exchange and is a smart signal of the climb toward the "one-world currency" that Square CEO Jack Dorsey envisions for BTC.
Northern Trust, one of the strongest players to climb out of the '08 crisis, is opening up to crypto hedge-funds in a move to capitalise on block chain expansion. The move highlights another strong institutional backer of cryptocurrency and marks another milestone for blockchain expansion.
The second half of July fell in line with a channel taking Bitcoin out of its head and shoulder's pattern that had persisted since early this quarter (Channel min/max $6,682.3 - $8,382.7). To start the discussion of this trading week, that channel was broken by an evening star pattern near the trading close of July 24th, which successfully signalled the bearish week ahead.
The past half month lends itself well to an 5-step Elliott Wave analysis (important for the projection thesis). Wave 2 falls in line with only a slight retraction from wave 1, and wave 4 does not retract beyond the crest of wave 1, indicating that this wave analysis fits Elliott's rules.
The wave pattern implies a 5th bullish wave with short-term growth bounded by wave 3. This is compounded by the hammer pattern encircled above near the end position of wave 4, indicating that the bulls are gearing up to advance against a bearish week. This hammer is followed by a quasi-three green soldiers pattern further supporting a short-term bull market, bounded in the short-term near the crest of wave 3 at $8,382.7.
In line with Bitcoin, Ethereum saw a strong bull market in mid-July in a break from the quarter's reversed head and shoulder pattern. Sidelining this break, which was reversed in line with BTC with an evening start pattern, gives us a strong 3-week trading channel. The re-entry into the channel on July 19th saw a bearish movement to the bottom rung reversed by a piercing line that bottomed out at $441.0 followed by a bullish three-green soldier pattern (as circled). Since early August, bullish attempts have been weak as all were preceded and followed by aggressive evening star trends (as circled red).
The late-June low of $406.81 hasn't been broken yet, but ETH is getting close. Once ETH gets closer to early April prices (YTD low), we will likely see a bullish week come through the cracks on ETH, however, $406.81 seems like it will be pierced before we can anticipate that growth.
As should be expected from the "penny coin" hailed for ease of execution, the 9-day MA and EMA has a harder time falling in line with volatile bear/bull swings compared to BTC and ETH.
In a similar trend to ETH, placing aside the mid-July break, we have a substantive channel throughout which the bulls respond to the bottom rung exclusively in hammer piercing-line patterns (as circled). Since the early-year peak, Ripple has seen a characteristic reverse head and shoulder pattern that is more aggressive than BTC and ETH as XRP inches closer to another YTD low (previously set in late June at $0.426).
Arguably, XRP is a coin set to benefit strongly upon macro tailwinds since it is one of the closest to its YTD low.
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