Bitcoin/Ethereum Approach Danger Zone
06/20/17 Financial Survival Network Interview:
“Kerry Lutz: “…one thing I notice you’ve been following pretty closely is Bitcoin and the cryptocurrencies. Are they too new to apply your type of analysis to or is it just another market?
Eric: A little bit of both. I definitely view them and when I’m approaching them, do it ‘with a grain of salt’ or a healthy dose of caution and even skepticism towards my conclusions. I want to see them really prove things and prove them over and over again to have a confidence level in there…
But there are certain pretty consistent cycles that you see month-to-month in particular markets that have been starting to show some consistency, particularly in Bitcoin, a little bit in Ethereum. The others haven’t really had enough movement and predictable wave patterns for me to have any confidence level in.
But what I was talking about a couple weeks ago was I thought that we would see a pretty significant intermediate peak in Bitcoin between June 5th and the 11th that just has had a very consistent pattern on a month-to-month basis and also on kind of a 3-months, 90 degrees of time when you look at a year as one complete cycle or circle of time. And so that cycle, which is as much kind of a natural cycle that appears in a lot of markets was telling me to look at early-June for a peak.
And so, as we came into June, I was really focused on some weekly and monthly resistance numbers that I generate for the markets I follow. And those numbers, particularly on the monthly basis for June, were coming into play between 2940 and a little bit over 3100. So, I was looking very closely at that price level right around $3,000 and in the June 5th – 11th time frame as being the highest probability for an intermediate peak, and see a sharp correction from there.
Sure enough, it bumped right up against that $3,000 level, did it right up in that couple of days’ time frame and already took almost a 30% hit from there. And at the same time, Ethereum saw about a 22-23% drop.
I had explained where in Ethereum had a very interesting, logarithmic kind of range succession…I was talking about that it seemed a bit extreme, but if it breaks through $200, we could be seeing $400. And sure enough, in that same June 5th-11th time frame, Ethereum had taken off…And it attacked $400, even intra-day I think it spiked above it in that cycle-high time frame. And before you knew it, it was back to almost $300, a pretty significant drop. But I think that may be the ‘first shot across the bow’.
And one of the reasons that I’ve described that is a bit more reliable from a technical standpoint is the Dollar and the Dollar Index. I documented if you look at this year, the Dollar saw a steady decline from January 3rd all the way into early-June. But for the most part, it was a very rational decline, really just a correction of a multi-year advance that it’s been in.
But whenever it had its bigger slides over sometimes just a period of a few days and/or when it would break a key 2-3 month support level, every time it did one of those 2 things, which is when a market’s showing a little bit more of an extreme; it’s when other markets start to pay a bit more attention, each time it did that was when Bitcoin and Ethereum would accelerate to the upside.
So, they’d be trading in a nice range, doing a normal trend, and then all of a sudden would just shoot up on those concerns with the Dollar.
And that correlation is what I’m looking at because I think we could be seeing a multi-month bottom taking hold in the Dollar. It had similar cycles right in the beginning of early-June, but based on a lot more data and a lot more indicators, timing indicators. And so, I thought we’d see a bottom in early-June and a rebound that could last into September.
And it just really made me pay that much more attention to the cryptocurrencies to see if they operate the inverse of how they have the first 6 months of the year and that is if the Dollar is showing signs of strength, will you see some profit taking come into many of those cryptocurrencies because to some extent, they’re a little bit of a ‘flight to safety’ for some investors or somewhere else to park their money when they’re more concerned about the Dollar, which has been the more stable currency for the last several years.
Kerry: Right. Yeah that definitely makes some sense there. I can see where analysis really does make sense. So, we’re thinking the Dollar’s pretty much hit its high here or it’s got a little more to go? Where are we at on the Dollar?
Eric: The Dollar I think has hit its low for several months…if you go back to March of 2015 when it set the peak that we’ve had up until now; it’s re-tested that a couple of times and spiked above it a little bit, but for all intents and purposes, that’s when we kind of ushered in a wide trading range.
Well, immediately after that March 2015 top, the Dollar Index saw a decline of 23 weeks…And then in late-2015, early-2016, it saw another comparable decline almost the same magnitude, somewhere around 8- 8 ½ basis points. And that 2nd decline lasted 22 weeks, so you had this kind of wave similarity. And you’ll get that particularly when a market is in consolidation. You’ll get that type of symmetry within the market as it’s kind of tracing out just a wide trading range.
So, when we peaked in early-January of this year, started to sell off, once it broke through some key support levels and said that this was a higher-degree decline than I had expected (I thought it was going to be a little bit less of a correction than it was). Then I started focusing on that 22-23 week time frame, which came into play in the first week of June and that magnitude of about 8 basis points on the Dollar Index.
And that’s almost precisely where the Dollar found itself during the first few days of June having dropped almost 8 basis points from the January high and having dropped 22-23 weeks. So, there was this very intriguing symmetry and many other indicators coming into play that told me this is a very likely bottom in the Dollar.
And then some intermediate buy signals were triggered last week down around 96.50. And I’m looking to see an initial quick surge in the Dollar back up to about 99. But if certain indicators are triggered during that advance, it’s going to confirm to me that a multi-month bottom is intact and that more upside is still to come after that first peak and whatever subsequent pull-back there is.
Kerry: Interesting. Interesting. So, it looks like it’s coming back again and what’s that mean for Precious Metals? ”
You can listen to entire interview at:
Dollar is steadily validating early-June projected bottom as cryptocurrency – particularly Bitcoin & Ethereum – confirm early-June (June 5–11th) cycle peak and enter most vulnerable period after June 22nd. Early-June drop is only ‘first shot across the bow’.
Dollar poised to pull back into June 23/26th – after which a new rally (and new Euro decline) could take hold. Gold & Silver set to corroborate with June 23/26th rebound peak. New Dollar rally could have exponentially-negative impact on cryptocurrency into late-June/early-July… and beyond. July/August 2017 holds important cycle application to Bitcoin.
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