Today’s article will identify buy signals in the cryptocurrency market using Point & Figure analysis. In yesterday’s article, I utilized a Japanese style of analysis known as Ichimoku Kinko Hyo.
Litecoin (LTC)
Litecoin’s Point & Figure chart above shows a pattern identified by Dahlquist and Kirkpatrick as a Spike Pattern. Spike patterns are any column of Xs or Os that measures between 15 to 20 boxes (it can exceed 20). A Spike Pattern usually identifies the end of a swing. Not necessarily the end of a trend, but the end of a swing. This type of pattern is one of my favorites because it is such a low risk but high reward setup. It is also one of the most aggressive and easily the earliest entry reversal pattern in Point & Figure. The entry for Litecoin generated when the first reversal column of Xs formed at $46. What do you do if price, like now, is above that entry? As long as it’s still below the 50% range of the Spike pattern column, I’m comfortable taking an entry. Don’t be surprised if this pattern generates a massive reversal.
Buy Signal @ $46
Bitcoin (BTC)
We could essentially take the entire paragraph for Litecoin (LTC) and swap out the words and values with Bitcoin (BTC) and the price levels on Bitcoin’s chart. A Spike Pattern is present on this chart, and the current column of Xs shows we are just one box above the entry at $7200. One thing I would call your attention to is the dominant bear angle above. What I find interesting is that the current column of Xs would form a double-top precisely on top of the dominant bear trend angle at one of the most important psychological price levels: $10,000. We should expect to see a good amount of activity in that value area.
Buy Signal @ $46
0x (ZRX)
0x (ZRX) was one of the best performing cryptocurrencies and altcoins of 2019 before suffering the same smack down the rest of the market faced beginning in June. From a Point & Figure perspective, 0x appears to have been trading in a protracted bull flag. I want to admit that the entry I’ve targeted above at $0.27 is a tricky one. First, the dominant trend is bearish because we are below the downtrend angle. Second, the double top that formed at $0.26 is below the moving average. However, given the extremely correlated nature of the cryptocurrency market – which is currently experiencing a significant corrective move higher – I am giving little weight to the present technical conditions on 0x’s chart when compared to the broader altcoin market’s technical conditions.
Buy Signal @ $0.27
Crypto.com (MCO)
Crypto.com’s token, MCO, has been a strong performer for all of 2019. I love and use their app, as well. On the trading side of this chart, it’s been a little whipsaw-y. There was a clear and robust dominant bull trend until prices fell below the dominant angle and we converted to a bear trend. Currently, MCO is pushing against that downtrend angle and looks to be flirting with a breakout. There’s a split double-top formation on MCO’s chart with an entry right on top of the downtrend angle. Given the strong bullish corrective nature of the aggregate market, we should see enough momentum to push MCO above that downtrend angle and see MCO transition back into a bull market.
Buy Signal @ $4.10