Mr. Holmes' Cryptocurrency Report

02/08/2016

Just by looking at the top ten cryptocurrencies by market capitalization, what we see is exciting...

It shows change, the forces of creation and destruction and the rapidly chaning composition of the most valued crpytocurrencies is a testment to competition in this sector. This is providing us opportunities to invest and trade; you can use of cryptocurrency exchanges or using ShapeShift and take advantage of these trends.

Every week I will be posting an outlook on major cryptocurrency pairs and give my commentary.

This is the report you must read if you hold, trade or are looking to invest in cryptocurrencies. I will outline potential trade parameters as well as analysis of Japanese charting techniques.

Bitcoin

BTC-USD (BitStamp)

After staying afloat above $650, BTC-USD has sharply moved to the downside, knocking through the $600 barrier today. The current price on the BitStamp exchange is $566, down over 6%. Significant fractal support is found at $540.00 but we could see this downward move extend as far as $435. The chart below shows the daily price action for BTC-USD and the Ichimoku cloud is red and expanding outwards, suggesting this is just the first leg of a longer-term downtrend.

Morevoer, we have seen a crossover of the base and conversion lines suggesting bearish momentum is now in play over the long-term. This is also confirmed by the Awesome Oscillator which is negative and trending even lower. Until $435 is reached, I see bearish momentum dominating and would look to buy around this level.

SELL

Stop Loss: $609.00

Take Profit: $435.03

Alternatively, sell just below the fractal support at $540, as a break below this fractal buy level will confirm the market's tendency towards $435.

Ethereum

ETH-USD (Kraken)

ETH-USD has continued to slide afer breaking fractal support at $12.50 and is now heading towards the $7 psychological level. The fracture in the Ethereum community has precipitated high volatility in the value of ether. The relative hashpower of the Ethereum miners to Ethereum classic has fallen significantly. Most of the support for Ethereum Classic has come from the Bitcoin community. Lots of interest has been shown in Ethereum Classic causing ETH-USD to head towards $4. Ethereum Classic and Ethereum could switch palces in terms of price as the market re-evaluates each token's worth. The chart below shows that the base line and conversion line have displayed a crossover suggesting bearish momentum over the long-term. Moreover, the Awesome Oscillator has turned negative today giving further bearish confirmation.

SELL

Stop Loss: $10.23

Take Profit: $4.00

Ethereum Classic

The biggest volume cryptocurrency has been Ethereum Classic. However, note that there is no margin trading on any ETC pairs at the moment. The incredible surge is due to interest over the immutable blockchain Ethereum Classic is providing, even though this version of the chain lives with the fact of the DAO hack, it provides credibility with a commitment to non-interference and those trading the coin are placing ideology above profits; a strong signal to the market. Several exchange have come out to show their support of this token and has gained a lot of attention of bitcoin supporters which seems to be strengthening amongst the crypto community.

ETC-BTC (Poloniex)

As ETC-BTC is such a young cryptocurrency pair, the Ichimoku indicator has not yet formed completely. Nevertheless, the chart below shows the 4-hour price action for ETC-BTC. We see that the first Eilliot wave that formed was the move up from 0.00066868 to 0.00487200. This is indicated by the fractal levels on the chart as everything between two buy and sell fractals is an Elliot wave.

The second Elliot wave retraced to the 23.6% retracement level as shown below. After finding support around 0.00166066, ETC-BTC continued higher suggesting the end of the second wave at this level. We currently find ourselves in the third wave which is the strongest and quickest wave out of all the Elliot waves. Therefore, buy positions are suggested as ETC-BTC is rapidly approacing the Fibonacci extension levels at 0.00746965 and 0.01167297. The Awesome Oscillator is positive and continuing to trend higher suggesting bullish momentum.

BUY @ market

Stop Loss: 0.00487200

Take Profit: 0.01167297

Alternatively,

SELL @ 0.00487200

Stop Loss: 0.0051000

Take Profit: 0.00227435

What is interesting to see is that Ethereum Classic and Steem are vying for third place in the largest cryptocurrency by market capitalization. Ethereum Classic has taken third place today but the constant evolution of competing projects ensures that the rankings will not remain stable for long.

Steem

STEEM-BTC (Poloniex)

STEEM is also very young with the Ichimoku indicator fully forming recently, as shown below.

The price action is now up against a resistance zone indicated by the red Ichimoku cloud. For a long-term bullish outlook, we require a break above the cloud, that is a break above 0.0046. Otherwise, we will see selling interest knocking STEEM-BTC back down and the market will look to test the support provided around 0.0032. The graph shows a double botom around this level providing strong support. Moreover, volumes traded on the Polonoiex exchange have increased recently suggesting price action will increase as well.

The Awesome Oscillator is indicating bullish momentum is starting to take hold as the bars are trending higher and will be further confirmed when the oscillator moves above zero. Moreover, it looks as if the conversion line will move above the base line, also signalling bullish momentum.

SELL @ 0.00408

Stop Loss: 0.0044083

Take Profit: 0.0030

Alternatively,

BUY @ 0.0046

Stop Loss: 0.0034

Take Profit: 0.0069

Dash

DASH-BTC (Poloniex)

DASH recently broke above the $10 psychological level and has displayed strength against bitcoin. The chart below shows a bullish breakout as the market price closed above the Ichimoku cloud suggesting the start of a long-term upward trend. The strong bullish momentum indicated by the Ichimoku cloud and the Awesome Oscillator indicate that 0.0200 is feasible in the medium-term and serves as an inital target for buyers.

BUY

Stop Loss: 0.0149

Take Profit: 0.0200