Weekend Update: DJI 1987 Progress, GANN Jan 27 and Bitcoin Forecast 17/15/20/14/30/20….

Technical Analysis and Trading Ideas

Weekend Update: DJI 1987 Progress, GANN Jan 27 and Bitcoin Forecast 17/15/20/14/30/20….

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Dow Jones Industrial and Bitcoin


Over the last couple of weeks, I have been researching the 1980’s period and there are a lot of similarities between the 1970-1987 and 2000-2018 period. At least, for the stock market.

“Rising bond yields. Full employment.  Fed tightening. Trade frictions. Weak dollar. Rising twin deficits, spurred by tax reform. Sound familiar? It should. This was 1987.  Start rebalancing.” Full article here.



Let’s start with the conclusion and then I will explain how I got there.

During the week, I will share my analysis and trading ideas on this page: Chart of the Day! 

Scroll down for the Weekend Update!

Enjoy yours!

Cheers!


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Conclusion – DJI Weekly Chart – 1987 vs 2018 period – Conclusion: Green or Red Scenario


In both scenarios, the green or red, we should expect a period of more volatility and weakness in equities.

The green scenario assumes a drop of 5%-10% and then another parabolic move up to Dow 30k.

The red scenario assumes a re-run of the 1987 crash is next.



 

 


Green Scenario  – Daily Chart – Drop of 10%, then new parabolic move up into 2019


In 1986 we had the Reagan Tax Break, stocks topped a year later.

In 2016 we had the Trump Tax promise, and the bill was signed JAN 2018. So topping out a year after the Tax break would point to Q1/Q2 2019, a high for the 2nd parabolic move up of the green pattern.



 

 


Red Pattern – This fractal analysis assumes that the 1987 period matches the current 2018 period and a crash is next



 

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Red Pattern 2018 = 1987



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So, now what?


Both patterns seem valid to me and what they have in common is that for both patterns, a drop of 10% next should be next.

After that corrective wave, the red pattern says: CRASH and the Green pattern says: PARABOLIC UP.

But no need to worry about a crash or not, as for both outcomes, a corrective pattern of 10% (abc) should come first.

Once that has formed, it’s time for either call options or (more) put options.

I currently have put spreads on the S&P500 and AEX, at Plus500 and I have short positions (US markets) at eToro as a hedge for my equity exposure.


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GANN – Annual Forecast – 2019 High Stock prices – 2020 Panic Cycle –> Favors Green Scenario –> Crash not in 2018 but > Q1 2019 – 2020 period



 

 


 

 



 


Bitcoin Daily and Weekly Charts


I noticed that the latest correction had the same pattern (fractal) as the early 2017 correction.

So if we assume that history could repeat, it would lead to the following forecast: 17-15-20-14-30-20.

I have 70% of my crypto assets secured through my ledger nano s. The other 30%, I trade at Plus500: low spread, guaranteed stop loss and leverage of 5 is possible.

During the week, I will share my Bitcoin ideas and trades on this page: Chart of the Day! 

Also, check out this analysis:

Is this why Bitcoin will hit $100.000 end of 2018?



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3 Responses

  1. XIA WANG says:

    Hi, Edwin, thx for your update. I noticed that you seem to have changed your mind. For the DJI,you used to think it would immediately copy the 87 model, and now you think the crash will happen in 2019? (But 10% correction is coming soon, right?) And for the Bitcoin, you think it would follow the 2017 correction but not silver model? I want to know how should i operate wenn it goes to 15k? Sell it and wait it go back to 10K like silver model or wait it go to 17/20K? Looking forward your reply.
    Bests, Xia

    • Edwin van den Berg says:

      Hi Xia,

      No, it’s not so much a change of mind, it’s just a different scenario that I added and that I did not see before. Secondly, Gann says it’s too early for a crash, so I have to take into account that it will take till 2019 for the big one.

      What I do regarding BTC is this: I have long positions, SL 9300 $, target 16-17k to sell 30% and buy back, if possible, at 13k-15k area for target 20k. This strategy is based on the chart I posted today, and deviates from the silver pattern. Both patterns still are valid, but if BTC breaks above 17k, then the Silver pattern becomes invalid. For now, I stay long and wait what will happen at resistance 13k area. If that breaks to the upside, 15k is next. If BTC trades > 10k, I will buy the dips and take profit on strength with 30% of my position to buy back at lower prices, 70% of crypto assets is buy and hold.

      • XIA WANG says:

        Thank you for your analysis! Lets see what will happen in next week. I hope this 10% correction will come as soon as possible.

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