BCH - Its time may come, just not yet!
BTC has been the king for a long while and continues to drag the market around by the scruff of its neck. Some say LTC led this recovery, but as shown in a post I recently shared, the data does not support this belief.
I have long term core holdings in BTC, ETH, BCH and OMG and will balance these around once a month to react to any medium term (2-4 week) trends. My trading pot is a completely different beast. I'll move this about much more frequently, in and out of USD and any of the blue chip coins I see are doing well or could be entering a new change of trend. If I'm in coins, I want to make sure I am in the right ones. This is easily done by comparing them against BTC and if one or two are trending, then comparing them against each other. Simples!
Right now, BCH is NOT trending and shows no signs of doing so. BUT it might do soon and I want to jump on in when it does. It could also keep going down and loosing market share, so I do not want to preempt a buy in on false hopes or a hunch.
BCHUSD (Top left and right)
If you look at BCHUSD (top left) you can see it has followed a similar pattern to BTC, completing a 5 wave impulse in Dec and having gone through a correction to bottom out on 6 Feb. However, as the top right chart shows, we then begin to diverge from BTC. Yes, it's had a recovery, but whilst BTCUSD has a clear 5 wave impulse, this is not obvious to see on BCH and it looks much more like a corrective ABC. This may not bode well in the short term for BCH as it increases the likelihood that the correction since 18 Feb is a continuation pattern into another five wave impulse down. On the positive side, there is a reasonable chance that we are in wave 3 of a larger five wave impulse, with wave 1 and 2 happening much earlier than I have shown (a) and (b) on the chart. This is what could be happening on ETH as well, but ETH has shown much stronger performance against BTC.
However, trading against BCHUSD is not that relevant to me. If I'm in coin, I want to be in BTC or one doing better than it or likely to have a change of trend relative to it. So, let's get to the important stuff and work through BCHBTC on the bottom left chart.
BCHBTC (Bottom left)
We can see that it has been through 3 impulses with corrective waves between them. These impulses are extremely fast and aggressive and very unusual in that they lack 1-5 wave structure. As of the end of December, BCHBTC has moved into a drawn out contraction forming a very long bull flag. The wave pattern in the flag is not crystal clear, I have shown a Double Zig-Zag, but it could also be a normal Zig-Zag or a Corrective Flat. The trading outcome on a larger time frame would be the same for me.
In terms of Fib, the Impulse 2 contracted past 0.786, almost to 1. We are now past 0.618 of Impulse 3. A reasonable expectation would be for it to reach 0.786, which would put it right on the bottom point of the bull flag and some historic support/resistance areas at 0.1BTC. However, it could break down and continue to shoot through past 0.786.
If BCH break outs above from BTC, the targets are relatively clear. There's huge resistance around 0.25BTC, which would also coincide with the expected target on the breakout of a bull flag (height of the pole from the bottom of the breakout area).
My plan
I have my core BCH and none in my trading pot. I plan to stay that way until I see a break out from this flag and will gauge how BCH is performing relative to the other blue chips before making a decision.
Break down
If we break through the flag and 0.786, I'll consider selling my core holdings and look to buy them back *IF* I see a reversal around 0.05BTC.
Break up
Trade risk will be reduced if BTC touche the bottom of the flag & the 0.786 line at around 0.1BTC & then break up out of the flag. This would be a very bullish scenario and I'd be looking to buy in through my trading pot and possibly core.
I have long term core holdings in BTC, ETH, BCH and OMG and will balance these around once a month to react to any medium term (2-4 week) trends. My trading pot is a completely different beast. I'll move this about much more frequently, in and out of USD and any of the blue chip coins I see are doing well or could be entering a new change of trend. If I'm in coins, I want to make sure I am in the right ones. This is easily done by comparing them against BTC and if one or two are trending, then comparing them against each other. Simples!
Right now, BCH is NOT trending and shows no signs of doing so. BUT it might do soon and I want to jump on in when it does. It could also keep going down and loosing market share, so I do not want to preempt a buy in on false hopes or a hunch.
BCHUSD (Top left and right)
If you look at BCHUSD (top left) you can see it has followed a similar pattern to BTC, completing a 5 wave impulse in Dec and having gone through a correction to bottom out on 6 Feb. However, as the top right chart shows, we then begin to diverge from BTC. Yes, it's had a recovery, but whilst BTCUSD has a clear 5 wave impulse, this is not obvious to see on BCH and it looks much more like a corrective ABC. This may not bode well in the short term for BCH as it increases the likelihood that the correction since 18 Feb is a continuation pattern into another five wave impulse down. On the positive side, there is a reasonable chance that we are in wave 3 of a larger five wave impulse, with wave 1 and 2 happening much earlier than I have shown (a) and (b) on the chart. This is what could be happening on ETH as well, but ETH has shown much stronger performance against BTC.
However, trading against BCHUSD is not that relevant to me. If I'm in coin, I want to be in BTC or one doing better than it or likely to have a change of trend relative to it. So, let's get to the important stuff and work through BCHBTC on the bottom left chart.
BCHBTC (Bottom left)
We can see that it has been through 3 impulses with corrective waves between them. These impulses are extremely fast and aggressive and very unusual in that they lack 1-5 wave structure. As of the end of December, BCHBTC has moved into a drawn out contraction forming a very long bull flag. The wave pattern in the flag is not crystal clear, I have shown a Double Zig-Zag, but it could also be a normal Zig-Zag or a Corrective Flat. The trading outcome on a larger time frame would be the same for me.
In terms of Fib, the Impulse 2 contracted past 0.786, almost to 1. We are now past 0.618 of Impulse 3. A reasonable expectation would be for it to reach 0.786, which would put it right on the bottom point of the bull flag and some historic support/resistance areas at 0.1BTC. However, it could break down and continue to shoot through past 0.786.
If BCH break outs above from BTC, the targets are relatively clear. There's huge resistance around 0.25BTC, which would also coincide with the expected target on the breakout of a bull flag (height of the pole from the bottom of the breakout area).
My plan
I have my core BCH and none in my trading pot. I plan to stay that way until I see a break out from this flag and will gauge how BCH is performing relative to the other blue chips before making a decision.
Break down
If we break through the flag and 0.786, I'll consider selling my core holdings and look to buy them back *IF* I see a reversal around 0.05BTC.
Break up
Trade risk will be reduced if BTC touche the bottom of the flag & the 0.786 line at around 0.1BTC & then break up out of the flag. This would be a very bullish scenario and I'd be looking to buy in through my trading pot and possibly core.
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