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Howdy Market Timers,

Happy Easter to All who Celebrate.

Since the US market was closed on Friday because of the Holiday, we will discuss Cryptocurrency in more detail today.

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Crypto - Weekend Action

The sideways action of the last few days continued on Friday and Sunday. Chart traders would call it a high-level consolidation before a push higher. It feels like everyone is waiting for something. Indeed, I detected this target on the 65-minute chart, so a pop higher in the next few days is plausible.

Ethereum is somewhat more intriguing. Several days ago, I posted on X (former Twitter) the 40D cycle target of approximately 2600-2750.

Recently, Ethereum generated the 20D cycle target, as shown below. If ETH hits the 20D target before Wednesday and then declines, the 40D target can be preserved; otherwise, if ETH hits the 20D target after Wednesday, the 40D target will be invalidated.

This 20D target is not high-confidence because the ETH declining price crossed the FLD and generated a price target. I prefer when up moves generate up targets. Also, a further decline below the FLD in the 3400 area will invalidate the 20D target. This is a tricky situation with up and down targets, which is not unusual in sideways moves. But we have some reference points to watch and react.

Lesson – Price Projection Method 2

Today, using Bitcoin as an example, I will explain the cycle-based price projection method we frequently use in our premium service. In cycle literature, the method is referred to as price projections using the forward line of demarcation (FLD).

Definitions:

- Cycle period = time distance between cycle troughs;

- Forward line of demarcation (FLD) = Price shifted by half the cycle period;

- Cyan line = median of the price bar;

- TD = trading day;

- CD = calendar day;

In this example, the FLD band is constructed by offsetting the median price by TD=7 and TD=8 TDs, which correspond to CD=9 and CD=10 CDs for the nominal 20D cycle that is presumed to vary between 19 and 20 CDs.

H1 is the vertical distance between the last low before the median price intersects with the left FLD band boundary and the intersection point.

H2 is the vertical distance between the last low before the median price intersects with the right FLD band boundary and the intersection point.

The lower level of the target range is determined by adding H1 to the left FLD boundary intersection point.

The upper level of the target range is determined by adding H2 to the right FLD boundary intersection point.

This method's price targets are satisfied with an average probability of 0.7 (70% of the time). Still, they could vary by percentage points for different cycle lengths and financial instruments. If one allows for the price not to reach the target range fully but to get close to it, the probability of success increases significantly.

In uptrends, the up targets are reached with a higher probability, and the down targets have a smaller probability. In downtrends, the up targets are reached with a lower probability, and the down targets have a higher probability.

If a target is not reached, it may indicate a pending price reversal due to one or more longer cycles pressing in the opposite direction.

For cycle periods, one could use Hurst’s nominal cycle periods (you could search for them) or estimated actual cycle periods if you have access to appropriate software and add some +/- tolerance around estimated cycle period lengths. Or follow my posts.

This amazingly powerful method is hard to challenge with any other method I have seen. It yields projection targets similar to Method 1, which employs converged CMAs and focal point-based projections, presented several days ago. This is unsurprising as both methods are based on cycles and their properties.

I hope this explanation “demystifies” the price targets I have been posting and will help you better understand future posts using this method.

A combination of price and time targets for turning points is a powerful tool that keeps one in the trend as long as possible and anticipates the price and time for reversals. We do this a lot in our premium service. We also supplement cycle methods with standard technical analysis and Elliott Wave analysis, including Fibonacci relationships, for fine determination of targets and possible turning points.

Note: if you do not have time to read this lesson now, save it; it will be a useful reference in the future.

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