While active traders have struggled to beat the performance of someone just hodling her Bitcoins, the sharp rise in the last quarter 2017 had even old veterans question whether a more active portfolio management style wasn't perhaps appropriate.
When managing a portfolio of coins (or any other portfolio for that matter) more actively, the old saying "timing is everything" most certainly applies. We therefore thought it would be of interest for the entire community to get a professional to do the technical analysis for all of us.
Taso Anastasiou is an experienced technical analyst who after all these years still finds the challenges of predicting market movements stimulating. Taso has been involved in the field of communicating financial market ideas for over 20 years having done this through a dedicated research house and the investment banking sector.
At present he is managing his own business, Mixani Analytics, focusing on technical analysis research and trading, financial market education and building rule-based models that can facilitate both research and trading objectives. Taso is a committed technical analyst who applies methods such as the Hurst cycle approach, Elliott wave analysis, Japanese candlestick techniques and the point and figure method to understand what the market is thinking. Taso will be focusing on providing a technical analysis overview of Bitcoin for the Bitcoin Association Switzerland.
The Hurst cycle approach was developed by J.M. Hurst and is a powerful analytical and trading tool. The premise is that markets moves in cycles of varying nominal lengths and that all these cycles are interrelated. We are thus able to analyse price action on all frequencies, from short-term to long-term, and formulate an opinion on where price action is in relation to the overall trend/cycle structure. Furthermore, it is also a trading tool in that it identifies the appropriate trading structures in relation to the cycle phase. Cycles are measured from trough to trough rather than from peak to peak.
Applying the Hurst cycle approach to BTC, suggests that the large swing between 13-Nov, 2017 to 7-Feb, 2018 completes a nominal 20-week cycle (100 days). This indicates that the 6012.62 low on 7-Feb, marks the start of a new 20-week cycle and is thus potentially a major low. If indeed the broader trend is still up and 6012.62 marks a major cycle low, Bitcoin is likely to move higher over the coming weeks.
The key cycle relationships to monitor over the coming week are:
1. It appears the first 10-day nominal cycle (7-days) completed its sequence on 12-Feb.
2. The 12-Feb low of 7805 marks the start of the second 10-day cycle.
3. Two entire 10-day cycles will in turn complete the first 20-day cycle.
4. The end of the first 20-day cycle will identify a strong bullish set-up.
The above points are important. As traders we need to reduce the chances of exposing ourselves to a resumption of the downtrend that has dominated since the 18-Dec high, if fresh long positions are to be established. In the Hurst cycle approach, we do this by avoiding any trading activity during the first two 10-day cycles and instead wait for the first 20-day cycle to complete. If prices begin to move higher off the trough of the first 20-day cycle, the underlying bullish condition is significantly reinforced and more importantly, the chances of falling prices will have been greatly reduced. The next update will focus on the trough of this 20-day cycle.
To summarise, BTC has potentially confirmed a major cycle low at 6012.62 and a new 20-week cycle phase is underway. Two 10-day cycles are currently in play and it would be prudent to wait for the trough of the second 10-day phase. This will in turn complete the first 20-day cycle. A recovery at this stage will represent a strong bullish signal similarly reducing the risk of a continued fall in the price of BTC.