Ethereum (ETH) and Bitcoin Cash (BCH) —  2009:Equities::2019 Crypto

February 18, 2019 / by Bill Noble

In our view, the Ethereum (ETH) up move matters and hints at a changing crypto landscape.

During the bear market, traditional technical indicators provided a lot of false signals. People who bought a traditional chart book and went to work got particularly hurt. Some of the worst offenders were patterns that used diagonal lines like triangles.

Over the weekend, we saw a gradual breakout from a special diagonal formation called a diamond. Normally, these formations can produce big moves. The fact that this diagonal pattern worked is an important sign of a major bullish shift in crypto as a whole (Figure 1).

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Going forward, we can see a chain reaction in which Ethereum (ETH) continues to move higher. If Ethereum gets through $150 and stays above it by the end of the week. That could trigger another leg up. $150 is the 21-week moving average on the Ethereum (ETH) weekly chart. This moving average was instrumental in creating the major bottom in 2017 and the major top in 2018 (Figure 2).

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We also believe that it is time to start looking at the world from the lens of the buy and hold investor on Coinbase. In our view, people are dying to get into this market. That could create a situation where coins that hardcore crypto investors don’t really like start exploding.

The best candidate may be the coin everybody loves to hate: Bitcoin Cash (BCH). The next technical points on the chart are at $200 from Fib circle analysis and a price gap from the hard fork at $280 (Figure 2).

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Even with today’s rally, that makes the current price at $141 seem like a bargain.  

The rationale for this Bitcoin (BCH) is straightforward. Retail accounts may indiscriminately buy it via Coinbase, and the coin may be dramatically under-owned by everybody except Bitmain.

Bottom Line: Ethereum (ETH) and Bitcoin Cash (BCH) are two coins you may have to learn to love. Like the equities bottom 10-years ago, the rally started with the sectors people were most afraid of. The crypto market seems to be repeating that same process.

The Crypto.IQ Trading Desk just took some profit on an Ethereum (ETH) trade initiated at $102.

Join me for the next trade.