After a grueling 2018 for altcoins, with very little sign of life across the entirety of the market, things are starting to take shape for a potential bullish trend reversal for the altcoin market. Signs similar to ones from the 2017 pumps are beginning to appear on the charts in terms of market dominance percentage as well as classical chart patterns and bullish breakouts above trendlines. Ethereum, the traditionally touted “altcoin market leader,” is also showing signs of a bottom as well, which would bode well for the rest of the coins that historically have followed in its footsteps. These factors along with several others are lining up for what looks like the best chance we have had in all of 2018 for an end to the altcoin bear market.
Starting from the macro point of view, let’s break down what we are seeing on the total altcoin market cap chart:
• Confirmed Bullish Divergence on the 1D: When price makes lower lows, and the Relative Strength Index does the opposite and posts higher lows, it shows that the underlying strength of the asset is not yet reflected in the current price, which typically resolves in an increase in price. We see that this is exactly what is occurring now.
• Break of long-term downtrend resistance: A trendline is confirmed by 3 reactions from price on said line. We saw a trendline that price reacted negatively to 4 separate occasions in 2018 broken recently, signaling a change in trend if not a full reversal.
• First test of the orderblock that sent prices parabolic in 2017: The candlestick that moves down before price heads upwards in a manner that breaks market structure in a bullish fashion is considered a bullish order block and can be seen as support in the future. This is where the last group of buyers bought the asset, usually on high volume, and will thus look to defend said asset from dropping beneath the block. The first test of an order block is the strongest and will provide the best reaction. We saw price bounce and then close above the weekly order block highlighted in green that sent price to unbelievable heights during the bull market.
• It is the time of the season: Mapping out the last two months of each year from the data available on the altcoin market cap chart that dates all the way back to 2013 shows that we have benefited from prices increasing four out of the last five years during November-January. Although the sample size is not the highest, the confluence provided by the above metrics lead us to believe we have a great chance to continue the trend of altcoins experiencing positive returns more times than not at the end of the year. On top of that, the one single year that did not produce stellar altcoin returns from November-January nearly broke even, which is far better than the performance of what we have seen thus far in 2018.
• The final step: Breaking a trend reversal down to the most basic and core steps, a reversal from a downtrend to an uptrend is confirmed after the first sighting of a higher low followed by a higher high on a significant timeframe. At the time of this writing, price is nearing a resistance level, when if broken, would result in a higher high on the daily chart following the recent formation of a higher low. This would be the technical signal using pure price action for the start of a new uptrend, which would be a signal across the board to start buying dips and accumulating coins for the next altcoin bull run.