What's So "Cryptic" About Trading Cryptocurrencies?

Lots and lots. Trading is not easy, period. But a few things can help.

By Elliott Wave International

Here's a cool parlor trick: If you want to bring a loud, rowdy room to a screeching silence, ask if anyone can explain how cryptocurrencies work.
Cue crickets chirping.

Turns out, the "crypto" part of the name originally signified the encrypted nature of digital assets and their anonymous owners. But it's proven foretelling, as cryptocurrencies have become synonymous with a cryptic impenetrability the likes of which no modern mainstream financial market -- especially not one so fervently embraced -- has known.

Even the experts are stumped by the exact logistics involved in cryptocurrencies, as these recent opinions suggest:

• "[Cryptocurrencies] are volatile by nature and thus don't follow traditional rules and conventions." (May 22 Coindiary.net)
• "The public's fascination with cryptocurrencies is tied to a sort of mystery, like the mystery of the value of money itself, consisting in the new money's connection to advanced science. (May 21 The Guardian)

That's the bad news.
But we're happy to bring you the good news; namely: You don't have to understand how cryptocurrencies work in order to forecast them.
For Elliotticians, the ultimate skeleton key to unlocking the mystery price moves of cryptocurrencies is Elliott wave analysis. After all, cryptos, like any other market, are traded in the open marketplace, where big groups of buyers and sellers try to outsmart each other, bidding prices up or down. Whenever large groups of people engage in collective activities, group psychology emerges. And few other market-forecasting tools are as good at predicting changes in market psychology as Elliott waves.
Our new, in-depth report titled "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" tells you more.
Here's an excerpt from chapter one:

Strategy #1: Stand Apart from the Crowd's "Madness"

The 2013 Amazon Finance bestseller, Visual Guide to Elliott Wave Trading, states,

"If you aim to be a consistently successful trader, then you must have a defined forecasting methodology -- a simple, clear, and concise way of looking at markets to predict what's coming. Guessing or going on gut instinct won't work over the long run.

"If you don't have a defined methodology, then you don't have a way to know what constitutes a buy or sell signal."

For thousands professional and individual traders around the world, that methodology is the Elliott Wave Principle. If you're new to it, you can summarize its basic tenets as follows:

• Group psychology swings from excessive optimism to pessimism, and back again
• In the markets, group psychology forms repeating patterns in price charts
• Because these price patterns repeat, they are also predictable

Once you know which of the 13 known Elliott wave patterns your market is in, you can make a probability-based forecasts as to what's next."

But what about using this methodology on actual cryptocurrency price charts?
Well, let's pick the world's largest and first-established market, Bitcoin. On July 12, Bitcoin was eight days into a pernicious losing streak with no obvious relief in sight. Wrote one July 12 news source:
"Bitcoin is spiraling downwards, and this time the downside seems unstoppable." (FX Street)
But for our Cryptocurrency Pro Service team, a very telling price pattern emerged front and center on Bitcoin's chart: an Elliott third wave. On July 12, Cryptocurrency Pro Service prepped the bullish stage and wrote:

"A swift move up through 6390.04 will add confidence to the idea wave (ii) has bottomed and Bitcoin is headed higher. A third-wave advance, wave (iii) should eventually see Bitcoin trade well above 7000.00."

The next chart moves forward in time and shows how Bitcoin's prices rose, in-line with the Elliott wave rally scenario:

The truth is, cryptocurrencies are cryptic. Heck, when's the last time a secret person with a fake alias created an untraceable currency for people to trade on an unregulated platform? Try NEVER!
Cryptocurrencies are also volatile, and thus risky as powder kegs. Every day, a new alt ICO coin debuts, named after some science fiction character or comic book hero (see: DASH, RIPPLE, NEO, TRON, and so on). Maybe one day, one of them will become another Bitcoin.
For those investors willing to commit to only the most reputable and proven crypto markets, and to choosing price charts that only exhibit clear and definable Elliott wave patterns -- there is a way to probe the mysterious nature of crypto markets and identify high-probability setups.
Our free report "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" explains more. Each chapter demonstrates the power of the Elliott Wave Principle to explain some of the most unforgettable recent moves in the world's top three cryptocurrencies: Bitcoin, Litecoin and Ethereum.
The free report gives you real-world charts and commentary from our top analysts as they navigate near- and long-term trend changes few others saw coming.
For example, remember back in 2012, when Bitcoin's reputation and value was being bludgeoned to a pulp? One coin was barely worth $10. And yet, our president and Elliott Wave Theorist editor, Robert Prechter, saw a sea change in the currency's future.
Here again, "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" writes:

Consider this quote from the August 2012 issue of The Elliott Wave Theorist:

"Presuming Bitcoin succeeds as the world's best currency -- and I believe it will -- it should rise many more multiples in value over the years.

"Be prepared to ignore the bad news, which will give other investors reasons to justify selling at the bottom."

Result: Bitcoin went from $15 per coin in 2013 to $20,000 at its height in December 2017 -- a gargantuan 133,233% gain.

The key to success in cryptos is to approach this wild market in a way that insulates you from the hype, frenzy and rumors -- and helps you act when others flounder. Our free crypto trading guide helps you do exactly that. Read the complete "Crypto Trading Guide: 5 Simple Strategies to Catch the Next Opportunity" now to better understand this fascinating market and all the potential opportunities it can offer.

This article was syndicated by Elliott Wave International and was originally published under the headline What's So "Cryptic" About Trading Cryptocurrencies?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Why Oil Prices Fell -- Stockpiles or Price Pattern?

You be the judge...

By Elliott Wave International

Let's cut right to the chart below. The shaded triangle highlights the dramatic price action in crude oil prices on August 15, when crude plummeted 3% to its lowest level in over nine weeks.

Now, according to the mainstream experts, the number one catalyst for crude's collapse was a shockingly bearish same-day Energy Information Administration (EIA) weekly inventory report, marked with the orange arrow in the bottom right of the chart.
What made the report so bearish was the fact that analysts forecast a 2.5 million decrease in oil stockpiles in the week ending August 10, while the EIA data showed a 6.8 million-barrel increase! Wrote one August 15 news source: "Crude Oil Prices Slammed by Surprise U.S. Inventories Build." (Seeking Alpha)
It's a perfect fit -- in the popular, news-moves-markets model, that is. The market was expecting one thing and got the complete opposite. Cue brutal selloff.
The problem with that model, however, is that it does investors and traders no favors. At best, it offers convenient explanations for price moves -- after they've already occurred.
Let's go back to the chart and consider the other arrow, the blue one labeled EWP, for the Elliott Wave Principle.
On August 14 -- one day before the bearish EIA report was released -- our Energy Pro Service identified a bearish Elliott wave setup on crude oil's price chart. There, Energy Pro Service editor Steve Craig outlined the most probable course for crude oil in the days ahead:

"Crude should be in the final leg of a countertrend advance, be it wave ii, or the larger-degree wave ((ii)). Resistance above the 68.37 intraday high is around 68.48 and then 69.11. On the downside, trade below 67.38 would offer an aggressive hint that a downward reversal is underway... the key point is that the larger trend is down."

What happened next?
The chart below sums it up best: Crude oil finished its wave ii and hit the skids in the 3% selloff on August 15.

Elliott wave analysis posits that the main driver of market trends is investor psychology, which unfolds as Elliott wave patterns directly on price charts.
These patterns are measurable and predictable, so they enable Elliotticians to anticipate future price moves -- before they arise.
If you are prepared to take the next step in educating yourself about the basics of the Wave Principle -- access the FREE Online Tutorial from Elliott Wave International.
The Elliott Wave Basic Tutorial is a 10-lesson comprehensive online course with the same content you'd receive in a formal training class -- but you can learn at your own pace and review the material as many times as you like!
Get 10 FREE Lessons on The Elliott Wave Principle that Will Change the Way You Invest Forever.

This article was syndicated by Elliott Wave International and was originally published under the headline Why Oil Prices Fell -- Stockpiles or Price Pattern?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.