For more than a year, Crypto.IQ has been using chart analysis techniques that were made popular by the earliest technical traders in the 1920s and 1930s.
Today, the work of Jesse Livermore seems very relevant in light of the crypto fundamental narrative described above.
Livermore was the inspiration behind a famous investing book, “Reminiscences of a Stock Operator.” The book, written in 1923, is considered the authoritative introductory text on trading and investing.
Livermore had a famous technical concept that he used to predict parabolic price action in stocks. The construct is named the “Livermore’s Speculative Chart” and is shown in Figure 1.
In this technical construct, a trend slowly builds in an upward sloping range. Then, after seven rounds of back and forth in this upward sloping range, the parabolic part of the move begins. The parabolic move has three components. The first two parts are very vertical in nature. The last move is small and likely represents a distribution as smart money sells to novice latecomers.
We are observing variations of this structure in Ethereum (ETH). The way we drew the construct Ethereum (ETH) seem poised for the start of the parabolic phase.
If the creation of Ethereum (ETH) futures leads to various entities buying to hold Ethereum (ETH) in inventory, this could create a move to $320 (Figure 2).
The counter-argument is that the Bitfinex scandal will lead to people selling big coins like Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) as a way to hedge Bitcoin (BTC) that may be trapped inside Bitfinex.
Bottom Line: We think Livermore work is interesting for Ethereum (ETH). We don’t know if you can trade off it. Scandals like the one at Bitfinex are tricky. The New York AG is involved. All it takes is one news headline to change the market.
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