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The Factor Daily Trend Model is Up. It will take a minimum of two trading days for the Trend Model to turn to a Down position. I own BTC based on the Trend Model, but would catapult the position if new lows for the bear market are registered.
There are two primary interpretations of the BTC daily chart from a classical charting perspective. The interpretation I have most favored has been that of a 7-month descending triangle dating back to Feb 6, as shown below. Under this interpretation a decisive close below 5600 or so would complete the pattern and establish a target of 2823. This approximate target is determined by projecting the height of the descending triangle downward from the lower boundary on a log scale chart.
There is a second classical charting interpretation that I might consider, given further developments. It is possible to redraw the lower boundary in a manner that ignores the Feb 6 spike low and produces a possible falling wedge. This pattern is most easily seen on the Factor RealRange chart. This interpretation would suggest a final wash-out decline toward 5200 (+/-100) to complete the bear market low. There is one significant problem with this interpretation – falling wedges should have a sharper angle of descent. Nevertheless I do not want to eliminate this interpretation as this time.
The falling wedge interpretation is quite consistent with the possibility of the 2015 fractal as I have discussed in the past. This fractal places the Jul 2018 high as point #9 with one more low to come as point #10. Note that in 2015/2016 point #10 was followed by extensive base building and a new bull trend did not emerge until 10 months after the point #10 low.
There are naysayers on social media who claim that cryptos do not comply with classical charting principles. To this I respond – nonsense. If anything, I find that cryptos comply with classical charting principles better than most of the other markets I trade. The reason for this – IMO – is that cryptos are more purely speculative in nature than are markets with established fundamental foundations.
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