After an admittedly odd past few weeks of trading, Bitcoin recovered well enough to take its highest close of 2019 thus far.
Despite July and August seeming somewhat lackluster with plenty of flat action, the weekly close at just under $11,500 (Binance) suggests things are looking up. In tandem with the bullish weekly view, a report written by a Goldman Sachs analyst is gaining wide circulation and giving legs to the sentiment that we’re heading higher from here.
In the report, GS analyst Sheba Jafari makes a case for short-term BTC price targets of $12,916 and $13,971. Interestingly, Jafari arrives at those targets through the use of Elliott Wave Theory.
It’s no secret that analysts adhere strongly to Elliott Wave Theory. Far from being a one-stop principle that explains everything happening in crypto trading, it does help us tackle the cyclical nature of markets.
Developed by Ralph Elliott way back in the 1930s, Elliott Waves describe the belief that price action plays out over observable patterns that repeat time and time again. In EW Theory, there are two types of waves:
1. Impulse Waves
2. Corrective Waves
Impulse waves are moves in the direction of the predominant trend, whereas corrective waves move against the trend. You can easily think of this by imagining BTC having a strong months-long uptrend, followed by a downward correction. The waves in-line with the uptrend are impulse waves, and those moving against it and pushing the price down are corrective ones.
It’s wrong to think that impulse waves can only correspond to moves up, however. Impulse waves are just about trends, regardless of whether they are up or down. A correction can occur to the upside, shaking out a downward trend. In that case, a corrective wave up would still be properly considered a correction.
Impulse waves move in packs of five, meaning you’ll always get five on-trend impulse waves before being hit by three corrective waves. That gives you a total of eight waves in a given cycle before the next trend takes hold.
Although EW Theory describes market action, it’s also an ace piece of psychological work. Traders’ emotions move in cycles of highs and lows. No one stays positive about a trend forever, and neither do they stay negative. The data which informs traders’ decisions and rationale shifts all the time, making it foolish to stick with any position dogmatically.
The cyclical nature between positive and negative/optimistic and pessimistic states of mind factors heavily into EW Theory’s own dynamic wave structure. Like the market, Elliott Waves never stand still. However, that doesn’t make them ideally suited to short time frame charts. Because Elliott Waves describe trends, they’re best applied to long time frames – especially if you’re just beginning to interpret the market with them.
Gold prices are hovering near $1,500 per ounce on Monday as the US-China trade war drags on and fears of a global economic slowdown increases.
As we start the week, spot gold is steady at $1,496 per ounce while US gold futures have been flat at $1,508 an ounce.
Bill Murphy, Chairman of the Gold Anti-Trust Action Committee (GATA) is very bullish on gold as he points out that yellow metal is at its “all-time highs in 73 different countries.”
In Canada, gold is $100 higher than its previous ATH and US dollars’ gold high is around $1,900 per ounce, and he says that level is gonna break out and start heading for $3,000.
After hitting multi-year highs, the yellow metal is still firmly in positive territory with strong fundamentals behind gold. While the price is edging lower, it’s just a correction needed before moving higher.
“Gold and silver are just going to go nuts because there is no room on the downside in a lot of these markets,” predicts Murphy.
“if they don’t keep printing the money and going to QE and keep interest rates low, it’s going to cause chaos. All I can say is I think gold and silver are headed for the moon,” he added.
On the Weekend, Goldman Sachs cut down its fourth-quarter forecast for US growth as it said recession risks were increasing due to the US-China trade war.
While US President Donald Trump said he’s not ready to make a deal with China, White House trade adviser Peter Navarro said they are still planning to hold another round of trade talks with Chinese negotiators.
During the first week of August, just like gold, Bitcoin enjoyed an uptrend as well, going from around $10,000 to above $12,300.
However, since then we have dropped to $11,350 on Monday, with 24 hours loss of 0.70% while managing the daily trading volume of just $616 million. However, Bitcoin’s recent surge showed that the flagship cryptocurrency is moved by macro events.
The fact that “the correlation between Gold and BTC currently is about .8,” as noted by trader Cantering Clark means, if gold is going to go nuts, the leading cryptocurrency can enjoy a spike in price as well.
Clark further points out, “the move up in Gold is likely just starting as it is an indication of the current climate, ultimately this would be great for BTC.”
This would also help in determining if Bitcoin is becoming a true macro vehicle, and remains “more aligned as a risk-off asset.”