Special Report: State of Altcoins

Letter Five

Welcome to this special report. Since I started writing these short market updates, I begin to notice that the act of writing these reports fuels me with passion that I have not felt a long time ago.

It might have to do with my chosen isolation and that the increasing sharing of what I see is driving me back into passion. I do hope you enjoy these writings and forgive me the period of adjustment that I need to go through as a writer, while I slowly find my own style in producing this content for you in the most efficient way possible.

This report will cover commentary about recent Bitcoin Price Action and a follow-up on the analysis published in earlier reports. It will also include analysis of five altcoins that seem to be in the very early stages of forming bull trends and might offer excellent returns. It must be noted that the market is at this stage not completely ready to take off, but in a phase which is in between. Trends are shifting, but they are only allowed to do so because BTC is trading relatively still in its current slow channel up. Market conditions might change quickly when BTC begins to make more violent moves, and we will see how altcoins react to it to draw further conclusions about the true state of the altcoin market. But for now, lets dive in and have a look at BTC

Bitcoin

Still in channel phase, BTC continued to climb up slowly but surely, now facing its last major resistance for the time being: The EMA 100/200 bundle, which is currently crossed downwards. In a natural trend, prices should find at least temporary resistance at these levels, if the trend is still valid. In the last reports I outlined some doubt whether this consolidation is a consolidation after all - or whether the trend has already silently changed. One thing that disturbs the bullish perspective is the lack of volume, which needs to be considered. After such strong drop what you want to see is a recovery supported by increasing volume, something we have not seen in this recovery.

For the time being we must expect BTC to continue its slow climb, as trend momentum does not easily switch to the other side without a catalyst. A catalyst that could enable the BTC trend to switch down would be a hard rejection at or slightly above EMA 200, which Bears would use to enter short. However Bears are still under severe pressure as they have been selling and shorting continously on the way up, with basically all of them holding underwater positions right now.

The 4H chart shows interesting developments as well. Besides having invalidated basically all of the bear setups/patterns, we are still climbing, while EMAs 100/200 have finally crossed to the upside. After such EMA trend reversal, every new High becomes an entry long in expectation of this newly-found trend to continue. We clearly sense that 4H supportive EMAs and Daily’s resistant EMAs are conflicting each other, which might lead to turbulence (which is still expected) until a decision is made.

Under current circumstances I would expect BTC to climb further, potentially attempting the upside breakout to retest at least the top of this channel around $8,400.

A breakout managing to hold above the top channel line would further open up the possibility of a rare top channel breakout. In this sense price would shoot above the top trendline, retest it and then continue to move upwards leading to a strong spike.

In this case I would expect resistance to manifest in the 9k region with $9,500 being a mark that will be decisive to break. Why $9,500? The level of $9,500 has been a respected support/resistance in the last year and as such we have to expect that this level will be retested sooner or later. Should an upward spike manifest, this is the level I would be looking for to get retested.

However as said before, in order to have the chance of generating such spike, first the Daily EMA block has to be taken out. EMA 200 currently resides around $7,878, so observing how price action develops at this resistance mark will be interesting. A strong rejection on volume in this territory could still lead to a collapse of this upside channel, so it is best to be cautious. Price action remains conflicting.

Altcoin Section

Digibyte [DGB]

Being one of the most interesting projects out there, Digibyte remains a pioneer in this market, one of the very few still dedicated to the core values of cryptocurrencies.

In recent weeks DGB has managed to impressively turn around its prolonged uptrend. It is one of the first market behaviors that make me believe that altseason is developing nicely at this stage (although it must be noted that this can change in a blink of an eye with an impulsive BTC move as we have often seen in the past).

However the volume on this break has been more than impressive and continuation should follow after a cooldown period. The original early entry (which is the earliest confirmed but risky point to enter) is around below 100, with a more solid signal around the 115 mark. Everything from around 120 to 100 is now buy zone, and a retest of that level would gladly be taken by market participants to open new positions or add to existing ones. There is no guarantee this level will be retested, but if it is, look for signals long. Expecting DGB to trade around a dollar in the future.

SiaCoin [SC]

The idea for SC is quite simple. Due to the past relationship between DGB and SC, which always tend to follow each other, it must be expected that SC will follow DGB’s footsteps in a time not very far away. First indications have already manifested in the chart and I consider buying SC around here a smart move. The correlation between DGB and SC has been a major in the past, so nobody can be surprised to see SC surging in some days from here.

Although this trade might be considered risky as it is based upon the idea that SC follows DGB’s path it could turn out to be a simple but quite profitable trade. Entry would make sense at the break of recent high at 26, SL would be placed below 18. First target would be around 40-45 albeit SC could continue to run just like DGB did.

DogeCoin [DOGE]

The true King of altcoins is still here, and seemingly preparing for another run up. The downtrend has slowed down significantly and strength is slowly being built. Having broken and retested one trendline already, DOGE is currently in the process of breaking the wedge structure to the upside. This would be an entry long with a SL below 25/26. Options for entering are manifold. Accumulation in anticipation is possible, but we know that DOGE is able to move notoriously slow, so I would wait for a confirmed structure break, entering with momentum.

Currently trading at 31ish, reaching 33 sats would be the early buy signal, a takeout of the Highs at 33 and 35 respectively would supply additional buying pressure. I would not set a target for this trade, and instead enjoy the early entry when the trend does change to bull here and let things roll.

Decentraland [MANA]

Purely from a technical perspective, MANA looks like a fulcrum bottom which might move up explosively when recent High is taken out. It is the kind of trade that I am willing to take with a very early entry, as it is offering great Risk/Reward should the trade turn out to be successful.

Entry would make sense with break of recent High at 423. No targets for this trade as well, as it could potentially turn out to be the bottom. In this case, when you think you entered at the precise bottom it is far better to let this one roll without being in risk, than to prematurely close positions just because you have generated nice profits, you might not get back in at a similar risk-free point afterwards.

Setting targets for shortterm trades may make sense, but when it comes to full blown trend reversals, this is not the way to do it imho, as trends may continue far longer than we think.

Ethereum Classic [ETC]

Even I am surprised that ETC made it to the list, but for several reasons the technicals offer great opportunities for Ethereum Classic at this time. In August 17’ there was a clear capitulation in the chart, which quickly reversed. Often, but not always, this happens at bottom. In other words, this violent flashcrash is the reason the price is being driven up afterwards, making this a huge trap for bears which become fuel on the way up. We can see that previous Highs have become support, a move upwards from here would make most sense for me.

Current consolidation is coming to an end in mentioned support, offering a low-risk opportunity to enter with the break of recent Highs. Confirmation of yesterday’s bull candle at 81862 could serve as an early entry, with another High just above at 83015. Correct Stop Loss for this trade would be below 72200.

In a Nutshell

BTC is still climbing, now facing last resistance at Daily EMA 200 [$7,877]. Both a strong spike up and a hard rejection off from this level are still in the books. Due to the current trend being up I would however expect continuation for now, with resistance being expected around $8,400 channel top and $9,200 / $9,500ish major resistance.

Specific altcoins are generally in the process of reversing their trend, offering great trading opportunities. No matter how excellent the prospects for alts are right now, all setups can potentially get nullified with a sudden and unexpected BTC spike. Should these altcoin patterns end up a failure, we know the market is not ready yet, which will result in more retesting. Generally speaking, the StopLoss levels indicated above are also invalidation levels for each chart. Caution is still advised, but as the saying goes, “A ship in harbor is safe - but thats not what ships are built for”.

Additional Chart

The opportunities presenting in altcoins are naturally reflected in the Market Cap Dominance. This is a weekly chart. The trendline has already been broken, although another retest should be expected, the general direction should be down - which would be great for alts.

Due to the proximity of current price to this mentioned trendline is close, a failure could technically still happen if the Dominance closes back above the line and continues the trend up. I believe the coming BTC moves will play a critical role in the outcome of this scenario, so remain viligant and flexible.

Hope you enjoyed this first altcoin report. If you have feedback of any kind please do write me at dagohbah@gmx.net.

If you want to support my work, donations are very welcome. Please feel free to check out my blog where I write about non-market related stuff. Striving to be of service,

May the Trade be with you,
CY

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