Explanation of our work - Crypto Currency Analysis

Relative chart against the Bitcoin

Probably one of our most important charts within our analysis is the daily relative chart against the Bitcoin. We are charting all our graphs against the US$ as our clients are all over the world. However, Bitcoin remains the benchmark in the Crypto currency land. That said, outperformance or underperformance of a coin against the Bitcoin is of major importance to be aware of.
We always chart the individual Crypto coin on a daily basis.
The thick blue line shows the relative strength of Ethereum against the Bitcoin. Please note that we are seeing trends within this relative chart as well., confirmed by the red trend lines. In the second half of last year Ethereum was weaker than the Bitcoin. So, we preferred an investment in Bitcoins over Ethereum during that time. However, this trend was broken by mid-December, clearly showing outperformance of Ethereum into the beginning of February from where another phase of underperformance started.
Ethereum is back right now, showing outperformance against the Bitcoin since the beginning of May.

Long-term overview showing the weekly chart

We believe that being successful in technical analysis is a result of knowing what you are exactly doing, developing your own style, consistency and discipline.
Therefore, we like to show you how we do interpret charts. So, please find the caption below.

We are always starting with the long-term price history, in most cases this will be the weekly chart. This to identify what the longer-term trend is. We are using a 200-week exponential moving average line (red line) and 40-week exponential moving average line (blue line) within the lower window a momentum chart, the weekly RSI.
When the ICO was recently and we do not have much history we will use the daily chart identifying the long-term trend.

RSI and Moving Averages

Then we will zoom in on the daily chart to see what the shorter trend will be. Within the daily chart we are using the 200-day exponential moving average line (red line) and 50-day simple moving average line (blue line). In the lower window again the momentum chart, the daily RSI.

Ichimoku chart

The next chart we are using to find confirmation about the trend is the Ichimoku chart, both on a weekly chart and daily chart in case of enough history. Furthermore, it gives us information about support and resistance within a trend. Please read this article on Stockcharts.com about the in-depth working of Ichimoku charts http://stockcharts.com/Ichimoku
Please see the daily chart of Ethereum below in combination with the Ichimoku chart. In general above the cloud the trend is up and bullish, below the cloud the trend is down and bearish

Point & Figure chart

We consider point&figure charting of major importance. An old charting technique, just like candlesticks. We favour these old techniques as they have proven its worth through decades. These point&figure charts are very helpful in, first, confirming the trend and secondly are giving us price targets within a trend where we can take profits or Sell our position.
Within consolidation patterns we are usually receiving both bearish and bullish targets. Although, this is indecisive it gives us an idea what the objective will be on both sides after the breakout of this range.
Please note how bearish targets in Ethereum at 817.72 and 549.72 have been achieved and exceeded in the first quarter of this year.

The next bullish target at 1,059.15 is an objective which is in progress and could be achieved later this year.
Please find more about the background of point&figure charting by reading this article at http://stockcharts.com/pointandfigure . Furthermore, we highly recommend the work of Jeremy Du Plessis about point&figure.

Trend and volume

Our last chart we are using is about trend and volume. Within the upper hand of the chart we are using a moving average crossover strategy between a simple MA-5 line (grey dashed) and a simple MA-10 line (blue thick line). A crossover strategy is always lagging, so it is not particularly about the signals of this system, the red arrows (bearish cross between MA-5 and MA-10) and blue arrows (bullish cross between MA-5 and MA-10). However, this is telling us something about the trend.
Please note the increasing number of signals during September through November. A crossover system will never work in a sideways trend because of the whipsawing signals. So, such a phase is showing that there is no trend.
On the other hand, there are a large number of periods where we can identify a trend, the recent downtrend in March, the bearish cross at the 6^th of March followed by the next bullish cross on the 10^th of April between the MA-5 and MA-10. This rising trend ended at the 11^th of May.
Nevertheless, this could be useful if you do not have a real plan about an entry or exit strategy. Furthermore, as a result of last year’s strong trends most coins where in unchartered territory, but when to get out ?

Last but not least volume, in the lower section of this graph. Volume leads price, this is one of the most important premises in technical analysis. What we would like to see is an increasing volume within a rise on absolute numbers, but also by moving above the 21-day moving average line of the volume. This is confirmed in November, December and January and recently in April and May.
A decreasing volume within a declining trend like February, March and May is telling us that this downtrend will stop somewhere followed by the next rise and does not announce the start of a larger bear market.

Please note the selling climax in January at the top in the market shown by the magenta circles. This was already a warning signal that a top was in based on volume. In combination with other technical analysis techniques you where possibly protected by the devastating decline in the weeks thereafter.

Relative chart against the Bitcoin

Long-term overview showing the weekly chart

RSI and Moving Averages

Ichimoku chart

Point & Figure chart

Trend and volume

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