In this crypto market brief, I will provide an analysis showing how bitcoin may be at a critical juncture, to the relief of HODLers who have witnessed the price fall from $20,000 to below $6,000.

Before talking of big numbers like $30,000 or $50,000, the market must first assert itself above $10,000, a key resistance going forward. A simple analysis suggests this level will be broken by the end of the year.

I also provide analysis of Monero, since out of all altcoins, it is the most significant challenger to bitcoin and has some interesting fundamentals for the coming months.

$7242.46: A Key Level for BTC-USD As the Week Ends

Bitcoin is set for its largest weekly gain since early April 2018, when the leading cryptocurrency managed to close $1326.96 higher than the open on the Bitstamp exchange. On Monday July 16, the price of bitcoin opened at $6353.25 on the Bitstamp exchange and currently trades above $7400 on Saturday.

If we look at the candlestick for the current week, shown below, we see that a close higher than $7242.46 is required for a motivation for a long entry and bullish outlook. The low of this week’s candlestick is $6333.63, while the high is $7696.88.

The difference, or range, of this week’s price action is $1363.25.

Now, for a convincingly bullish close this week, we require the close of the candlestick to be in the upper third of the range of the price action. Now $1363.25 divided by three is $454.42, so $7696.88 subtract $454.42 gives you $7242.46.

Going forward, we want to see a close above $7242.46 for BTC-USD on July 22 (on the Bitstamp exchange) to motivate a nice buy entry. On the other hand, a close below $7242.46 would indicate that the bullish momentum may begin to falter.

In any case, the closer the week’s close is to $7696.88, the better, as it will indicate that buyers are in control at the end of the week and are in a better position to remain in control for the week beginning July 23. In fact, a bullish Marubozu candlestick will be painted for this week, if the week’s close is very close to the high, say at or above ~$7680.

If you are interested in candlestick analysis, and want to learn more, check out my guide on BTCManager, or better yet, read the book that inspired it, authored by Steven Nison (available to buy here.)

Fractal Low Suggests Market will Search for New ‘Ceiling’

After printing a fractal low (or buy fractal) at $6072.00 for the week beginning June 25, and regaining the former support, (turned resistance), at $6427.16, the next fractal in sight on the weekly timeframe is $9948.98.

Bearish Exhaustion Confirmed: 8 Consecutive Lower Lows, No New Low After Three Weeks

Looking at the chart below, we observe that there have been no new lows below $6072 for three weeks now (providing the price action doesn’t go below $6072 before midnight July 23, which seems unreasonable/unlikely).

We also observe that we have had eight weeks of consecutive lower lows, so according to the record session rule, we are in exhaustion territory for sellers/bears. This rule of thumb, which can also be studied further in Steve Nison’s book, tells us that after 7–10 “record sessions” (or near consecutive higher highs/lower lows), there is a decent chance of a reversal, as buyers/sellers become exhausted and a new trend takes place.

With bitcoin, we have observed 11 record sessions before and it does depend on the type of market as to how we use the rule of thumb. I personally, will look for 7–11 “record sessions.”

So after three weeks of no new low (or high in another case), the count is restarted.

After eight weeks of consecutive lower lows, we witness bearish exhaustion and according to this rule of thumb, a new count will be started on July 23 and is most likely to be bullish, since we observe a higher high this week. The current week’s candlestick represents the second near consecutive higher high since the fractal low at $6072. This new count will be confirmed on midnight July 23, as the weekly candle closes, and provide a good entry into a long position.

Take profit (TP)— $9947.49 — the nearest fractal resistance on the weekly.

“Mental” Stop Loss (SL) — $6269.69 — low of the green candlestick which serves as the first record session high. (I say “mental” SL, as I would prefer to setup an alert just above this level and then manually exit the trade if the stop loss is reached.)

So the risk you take on this trade (assuming we have a $7400 entry) is $1130.31, while the reward is $2547.98, which makes the risk-reward ratio comfortably greater than two. Either the trade plan works out, and we gain $2547.98 for every bitcoin put up for the trade, or we lose $1130.31 for each bitcoin we take on the trade.

Also, using the record session rule of thumb, we can start to map out for how long this bullish count may go on for. Using the rule of thumb, we may get into bullish exhaustion after the market has posted 7 record sessions, or 7 near consecutive higher highs. At the earliest, this will occur during the week of August 20, 2018 and this scenario assumes that the next five highs will be consecutive.

At the latest, assuming we will obtain 11 near consecutive higher highs, with two weeks of no new highs between each high, we will see the upward trend start to reverse in the week of January 21, 2019. This timeframe is displayed in the chart below by the blue vertical dotted lines.

Obviously, as time goes on, this zone will be narrowed down as we become more clear on the evolution of the bullish count. But for now, this is the time range we should look to exit longs and begin to look for sells. Of course, if we have three consecutive weeks of no new highs, the bullish count is invalidated and we start again.

An Epic Signal Patiently Awaits…

The Monthly chart also points to latent bullish momentum that may be unleashed before the end of 2018. What I’m talking about is the bullish saucer, which looks to be imminent on the monthly chart below. To learn more about the Awesome Oscillator and Bullish Saucer signal, read my guide on BTCManager.

The monthly chart below for Bitfinex shows that the Awesome Oscillator has been falling and red for four weeks. Eventually, the Awesome Oscillator will turn green again, and that is the first sign we look for. A Bullish Saucer is a momentum play.

If the Oscillator is positive (which it is currently), but starts to fall and show red bars, once we get that first green bar, which is higher than the previous red bar, but lower than the red bar preceding the most recent one, we get the Bullish Saucer setup.

The chart below illustrates a possible (perhaps optimistic) scenario. That is, that the Awesome Oscillator turns green for the month of August.

The blue vertical line is there to illustrate that up until that point, the price action is genuine, whereas after this vertical line, I am illustrating a potential scenario.

Once we see the first green bar on the Awesome Oscillator, we just have to wait for that month’s candle to play out. Then, we wait until the August close, record the high of that month’s session, and setup a limit order to buy once the market breaks above August’s high. So, if the Awesome Oscillator turns green for August, we look to setup our limit order on midnight of September 1, 2018, and await for the order to be filled.

Let’s assume now that August will see another red bar on the Awesome Oscillator. Not to worry, we wait patiently until the Oscillator does turn green, and we just repeat the steps above in a similar fashion.

Ichimoku (Weekly) Also Points to Return to $10,000

Looking at the Ichimoku indicator for the weekly price action on Bitfinex, we see that a weekly close above $7,200 will see BTC-USD close above the conversion line (blue), which provides a weak bullish signal. Normally, a close above the conversion line when the price action is below the Ichimoku cloud is a signal that the downward trend may be ending.

If BTC-USD can manage to stay above the conversion line, we could see bitcoin drift toward equilibrium, indicated by the Ichimoku cloud on the weekly timeframe.

We see that the cloud ranges from around $10400 to $12000 for the four weeks ahead. The cloud becomes thinner as we go further out, suggesting weaker and weaker resistance provided by the Ichimoku cloud, up until December 2018. The cloud suggests that a break above $10000 will be easier for bitcoin during mid-September 2018 ‘till early December 2018, rather than anytime before this.

Moreover, we see that the lagging line (purple), could break out of a zone where it has found support multiple times, highlighted by the light blue box. A break above $7718 will see a rush of bullish momentum, as suggested by the lagging line, as the most recent peak is at $7718, and should head toward testing the next peak, around $9500.

Against this favourable technical backdrop, we have strong fundamental factors leaning towards a bullish outlook for bitcoin.

Firstly, there is a lot of money on the sidelines still and recent murmurs indicate that the world’s largest asset manager, BlackRock, is looking into bitcoin and cryptocurrencies. If they take the dive, it could be a big catalyst for other institutions to get involved. However, cryptocurrency needs to become a bigger force in the financial world before the Mr. Big’s of finance start to get involved.

Also, bitcoin is making strides in terms of fungibility. Recently, it was made known that nopara73 had come up with a wallet that improves privacy, known as the Wasabi wallet. Along with the continual improvements in the Samourai wallet, it is becoming easier to use bitcoin in a private way. The launch data for the Wasabi wallet is expected for October 31, 2018 and will protect users from analytical techniques used to unmask the trail of bitcoins, make the use of Tor mandatory and uses a trustless mixing technique known as Chaumian CoinJoin.

Finally, we have the rumours of a bitcoin ETF being approved by August/September. Using a simple comparative analysis, many have made the link with the launch of ETFs for gold and the massive bull run that followed and transposed this onto bitcoin. Of course, buy the rumour sell the news applies here, and if there is a bullish run on a possible ETF appoval, it could be ended once the ETF is actually launched.

However, I personally think that ETFs may not be a catalyst for a bull run that everyone is hoping for, in a similar vein to how the launch of futures contracts were not a catalyst for a bull run for bitcoin. It may take time for latent demand to reveal itself and take advantage of these opportunities to gain exposure to bitcoin. Moreover, buying bitcoin itself should be the goal, not a contract representing the underlying value of bitcoin. It is no secret that paper contracts for gold and silver are used to supress the prices of these precious metals.

How do we know it will not be the same for bitcoin, another form of honest money that the powers that be are willing to cripple and step on because they know where it’s going to lead (a destruction of most, current power structures)?

Monero Looks For New Lows Against Bitcoin

The price of monero against bitcoin on the Binance exchange shows a bearish outlook. The fractal low 0.017697 has been tested and a weekly close below this level will point to further losses.

Key support is seen at 0.016105, the trough of the lagging line, and at the base of the candlestick with the largest green body, at 0.0125. Set your limit buy orders here, as these two levels are where XMR-BTC will most likely reverse.

Looking at the monthly timeframe on the Kraken exchange, we see that support is indicated between 0.0140 and 0.0130. Volume has been declining for some months now, and we may be reaching an extreme point soon when the only way for volume is to go up. The conversion line suggests equilibrium around 0.0226 and serves as a critical level to keep an eye on over the long run.

Any buys at the levels mentioned above should target 0.0226 at least, or as an initial take profit point.

The outlook against USD shows a more bullish picture. As shown below by the monthly timeframe, we see that June’s candlestick closed at $130.99, and looks to form a fractal buy level at $106.42; this fractal will be confirmed if XMR-USD stays above $106.42 until the end of August.

We also require a monthly close above $130.99 for July to give a bullish indication, as this would confirm a trough in the lagging line and should lead to a drift toward the most recent peak at $241.

Fundamental factors also favour monero in the months ahead, with Kovri’s testnet integration expected by the end of 2018, which is the final part of the puzzle for financial privacy; while monero hides address balances, sending amounts, and receivers, it does leak metadata, such as IP addresses. Kovri will enable monero users to prevent leaking this metadata and offer more robust privacy for users.

Already, it is difficult or perhaps even near impossible to break the fungibility armour of monero; this will be galvanised with Kovri and should spark some serious buying interest.

There are more wallets than ever, with the MyMonero desktop wallet coming soon, integration on the Ledger hardware wallet (and soon to be integrated on Trezor’s Model T too), Cake Wallet for iOS, X Wallet (also iOS), Monerujo for Android, and of course the official GUI and CLI wallets.

Let’s also not forget that around one year ago, a community funded hardware wallet was not even in initial conception stages, and here we are today, with a prototype device ready for DefCon and available online to buy.

Marketing and outreach is also gaining momentum, with the decentralized project only just starting to venture into promoting monero. Unlike other cryptocurrency projects, marketing was not a priority, until at least the technology and development has proven itself.

By making it easier to store and understand monero, marketing and the increasing availability of wallets should provide a boost to its awareness amongst the public and eventually translate into greater volume and buying interest.

Also, we have bulletproofs potentially being integrated in the near future, which will increase the efficiency of monero. The problem at the moment is that due to the privacy-preserving measures, transactions are bigger and more costly compared to bitcoin. However, bulletproofs will reduce the size of transactions, hence reducing fees, and the growth of the blockchain will be smaller, making it easier/less resource intensive to run a local node. The bulletproofs upgrade has a tentative integration date of September.

Disclaimer: I am presenting my view of the market, and in no way constitutes investment or financial advice. Markets can be volatile and change quickly, so only risk what you are comfortable losing.

If you found this article useful/enjoyable, you can find my BTC and XMR addresses below:

BTC — 3BqEZJJaTL31AoycRmJHdw42jcRWz7xAam

XMR — 43ztuCoWYTz4PXwojyucaWGtZdy3MHSuw15yamYRRUu1GksYKRYDfGNXRkSsAkSY2k4y382uVHGs9ZY37cvBbRAo6AfS3hr