Hi, I'm Giovanni And in today's crypto markets video we are talking to Dan McDermitt from TheChartGuys
com who is going to give his opinion on the markets and do some technical analysis for Bitcoin and several altcoins Dan, could you please introduce yourself Sure My name is Dan McDermitt I work for and founded the ChartGuys
com with my business partner, we are technical analysts trading all markets from commodities, regular old stock market, we jumped into the cryptocurrency space two years ago when the hype took off and started to cover this space and have a lot of interest in the space due to the opportunity And we've been very pleased with how technical analysis has been applied to this space and has worked really well since I started trading it in the summer of 2017 Great So what happened to Bitcoin this week? Can you give us a brief overview of the latest movements Sure
Well, we just had some very significant action just yesterday where we had news come out which is causing a little bit of fear in the marketplace We've got news about Bitfinex and Tether and potentially funds that are missing or held up and it really just was a wake up to the market that caused a lot of selling pressure But honestly what is standing out to me is the resiliency of the bulls to be able to hold the $5,000 price level at this point in the face of that weakness How do you think this Tether-Bitfinex allegations impacted the market? Well, personally for me, I have always stayed away from Bitfinex, because I don't fully understand Tether and that's as simply and as honestly as I can put it So because of that I've stayed away from it and I've dealt with exchanges like Coinbase that allow me to trade in U
S dollars and that just makes me more comfortable as a trader, because we have so much risk trading these cryptocurrencies that that's only an additional risk that I try to mitigate for myself personally, but it seems that other people are getting a bit of a wakeup call, people are transferring their funds off of Bitfinex The last thing people want to see is another Quadriga situation or something where their funds are going to be compromised So it's the kind of scenario where we're seeing the market respond to this bearish news, but again it's almost like we've seen the bulls strong with the price movement from the $3,000 to $5,000 over the last couple of weeks And I think that what we see, how we see the market respond to this negative news is going to be very telling for us, because I think a lot of people are going to say: “Wow, well, if with that much bearish news if we're still holding $5,000, maybe the bottom is in for Bitcoin and maybe a bullish run can get going now
” So I think that if we are able to hold strong in the face of this reaction over the next few days as the news continues to get digested and we get more and more facts, I think that it could be perceived as a bullish hold of support That's very interesting So, talking about technical indicators What are the main indicators we should look at to interpret the markets right now? Well, for me it's always volume is a very important one and you have to ensure that you're not just looking at the volume on one exchange We want to know what the volume is of the entire cryptocurrency ecosystem
That tells us what's going on in terms of how much buying pressure there is We also have to be cautious of the fact that some exchanges have been accused of doing wash trading which is creating false volume of trading back and forth with themselves So we look at volume, we look at RSI, RSI lets us know when things are getting extreme, weather is getting extreme with selling pressure and getting extreme with FOMO and buying pressure And another one that I use is exponential moving average, 12- and 26-period, and that's something, I've been a trader for seven or eight years before I even touched cryptocurrency, and that was new to me in the cryptocurrency space I watched how the price was reacting to those exponential moving averages, and it was very notable for me how they were able to hold as support and resistances and be good guides, just as good visual indications to be watching for whether or not the bulls were able to get over those resistance levels and prove some strength to us or whether or not the bulls were able to hold those support levels and I'll show you, it is just an example here real quick, where the exponential 12-period support on Bitcoin has been holding really well over the last couple of days
And trying to share my screen, here we go So here on the daily timeframe, this is a daily chart where every single candlestick represents one trading day worth of action, and we can see this 12-period exponential moving average has held as a support test after test, after test And that's now finally been lost on this news, we closed below it So over the past two weeks it was very easy for me to say: I am bullish on Bitcoin as long as this support keeps holding, because the support is trending up Of course, if we are bullish we want to see the price trending up as well, but now that that support has been lost it's almost like we put on the brakes as bulls and say okay, we need to be a little bit cautious now
The bears have made a statement and now we have to see how do the bulls respond to this Are we going to be able to hold on or are we going to break the low of consolidation? Right now $4,900 is the most important support level for me and that is the low of that consolidation from the initial bull move So if $4,900 can hold in the midst of all this bearish action – I am going to be bullish The fact that Bitcoin was able to hold that level Thanks a lot
I wanted to ask you one more question about something that Eric Voorhees has said, the CEO of ShapeShift So the number of data confirmed Bitcoin transactions apparently, according to him, is the most important indicator, the most relevant metric in the cryptocurrency market Do you agree with that? Well, I can come from as a trader perspective, I would say no, I would say price is always the most important thing The only truth in the market is what the price is right now in this moment That's the way that I view markets
That being said, it's absolutely an important indicator, because from a fundamental perspective, if we're seeing more and more activity in the cryptocurrency space and we're seeing more and more adoption then in the end, in the long run that's only going to help the price go up So it's a very important indicator to be keeping an eye on, but it's entirely possible that the price of Bitcoin goes down while the number of transactions are going up So for me it's always the price level as the most important thing that we're watching But the transaction number definitely worth keeping an eye on And it's just a difference between whether you're a technical trader or a fundamental perspective
And in my opinion, having some combination of both styles is the ideal way to be a trader Okay, Dan So I would like to ask you, can we see some indicators from the charts which make us guess what will be the price of Bitcoin in the next few weeks or what would be the movements of the main cryptocurrencies in the next few weeks? Sure So one thing as a technical analyst that I want to distinguish with, I don't do predicting, but I can look at what's the most likely scenario So I can't look at a chart and say: this is what the price is going to be
And the technical analysts that do that are kidding themselves to think that they're able to predict what's going to happen So what we do is we react, we react to key changes in the chart and that tells us what's going to happen in the near term So just looking at this daily chart I can say that if $4,900 breaks we're going to see weekly consolidation very likely over the next couple of weeks And that would be on the weekly timeframe here, again where every candlestick is now representing one week The most important technical change that has happened is the change from a downtrend to an uptrend on the weekly timeframe
From the all time high we were in a weekly downtrend for month, after month, after month And recently, in the past few months, we have changed that trend with a higher low and a higher high, that's a trend change So if we break $4,900, the most important short term support level for me that tells me this weekly chart needs to pullback and form a new support level which will still maintain the higher low uptrend compared to $3,337 and it's no red flag if we keep the weekly higher low pattern intact So I can say that if we break $4,900 weekly consolidation is going to occur That's going to be normal and healthy, unless we see significant bearish volume associated with that pullback and we're gonna be looking for Bitcoin to maintain this weekly uptrend over the next couple of months unless we see some, and again it's really a news reaction that it would take to derail the bulls at this point
And the fact that that is not happening on this news reaction gives me confidence that this weekly uptrend can remain intact and we're going to have a very key battle of $6,000 resistance, because we had a ton of price action in the $6,000 range back in the summer, and now that previous support is going to act as resistance on the way back and I know that from talking to a lot of traders on the social media universe that all eyes are watching the $6,000 level and there's a lot of people that still think Bitcoin needs to drop to a lower low And I asked them: “What would it take for you to change your perspective?” And most of them say: “If we were able to get over the $6,000 level and turn that into support – I would feel that the Bitcoin bottom is in” So that is an important psychological level that we're going to be watching as well Do you have any comments about specific altcoins? Are there some specific altcoins which performed in a curious way or in a particular way? So the altcoins that I focus on the most are Ethereum and Litecoin and that's just because trading on Coinbase, those are the best for liquidity, the best trading opportunity and they're doing some very different things just with how they are set up So Ethereum over the past few weeks have shown us it is clearly weaker than Bitcoin
We have a very significant pull back from the top of the move that we saw And it's shifting to show me that Ethereum is more bearish relative to Bitcoin, and Litecoin is a bit more bullish relative to Bitcoin So this is Litecoin’s weekly chart Litecoin changed its weekly trend before Bitcoin did The percentage move from the low at this point we made it all the way up 350% percent from the low to the high
So it's a very significant bull move and it gives the bulls a lot of space to be able to maintain their uptrend with higher lows and higher highs If we look at the Ethereum bounce on the weekly timeframe from the low to the high we went from about $80 and we made it up to the $100 rate or the $180 range, but that was only about 130% move So Litecoin saw significantly more upside and a lot of people attribute that And again knowing some of the fundamentals helps, but the Litecoin having event that's going to be upcoming that is a reason that a lot of people, perhaps, are going to be a bit more bullish on Litecoin than on Ethereum So comparative to Bitcoin right now, if I had to rank them, it's Bitcoin as the main indicator that we're watching for clues, but Ethereum is showing weakness and Litecoin is showing strength relative to Bitcoin longer term
We were here with Dan from TheChartGuyscom Thanks for having me on, Giovanni, it was nice talking with you and I'll see you next time If you're trading crypto and want to do it more efficiently, here are some tips for you from our partner TradeSanta Tip #5
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