The sage Burt Blumert once wrote about chartists,
I’m talking about those arrogant snobs who promote the belief that the future performance of markets can be predicted from analyzing yesterday’s lines and dots on a page.
This group is deadly dangerous: They leave empty bank accounts and broken spirits in their wake.
Look, if there are customers willing to pay the Gypsy lady to read tea leaves, that’s OK with me. After all, she entertains her clients — but never presents herself as possessed with a body of scientific knowledge.
Even the Voodoo Priest who predicts the future by reading animal entrails, never confuses the source of his dark knowledge with human reason.
Of all the mystics, only the Chartist pretends a rational basis for his gobbledygook. The Chartist further elevates his status by including himself in a larger, even more virulent group that label themselves as “market-technicians.”
With crypto-favorite Bitcoin now trading at $7,317.44 as I write, and Main Street along with Wall Street suddenly interested, the technical analysts are judging the price action, rather than just the cryptocurrency evangelists who say, as a friend summarizes: “Bitcoin is gold-squared. Bitcoin is good. Trade bitcoin, Use bitcoin. Liberate the world. Money doesn’t matter–freedom does. Bitcoin will make us all rich. But especially you.”
Omkar Godbole explains on Coindesk.com,
After the cryptocurrency printed a fresh record high of $7,454.05 on Coindesk’s Bitcoin Price Index (BPI) earlier today, BTC has failed twice to hold above $7,400 mark.
The price action, when viewed on the technical chart, shows a “textbook” bull market exhaustion pattern – the first legitimate sign of a tired market after days of solid rally.
If you would like Godbole to take you a little further out into the technical weeds, he writes,
Formed when the open and close for a stock or tradeable asset are virtually the same, a doji candle is a neutral pattern, often read as a sign of exhaustion if it occurs at the top or bottom of the trend. On the chart above, the doji candle has appeared at the record high, suggesting the possibility of bull market exhaustion.
However, only a bearish follow-through (next candle is negative) would signal bullish-to-bearish trend change. A bearish doji reversal would be confirmed if the current 4-hour candle ends with losses (i.e. is red).
The story doesn’t end here, though. A bearish price RSI divergence would be confirmed as well, if the current 4-hour candle is red. Bearish price RSI divergence occurs when prices print higher highs, while the RSI prints lower highs.
So Godbole, reading bitcoin’s tea leaves, believes a healthy pullback might be in the offing down to $6,400-$6,700. However, if in the next 24 to 48 hours, bitcoin’s price gets back to $7,400, it’s onward and upward.
Nobody is talking about doji candles over at your local coin shop. If you can find one open.
“Gold prices are rallying, but retail gold dealers and shops are struggling to survive,” writes Stephanie Yang for the Wall Street Journal. American Eagle sales are the lowest since 2007. In fact, an online seller I purchase from is advertising today, “VARIED YEAR 1/2 OZ AMERICAN GOLD EAGLES JUST $19.99/COIN OVER SPOT!”
Gold sales have dropped 70% from last year for some gold dealers. “It’s been absolutely dismal,” Peter Thomas, senior vice president of metals at Zaner Precious Metals, a Chicago precious-metals dealer told the WSJ “A lot of guys have been really hurting.”
Ms Yang says that according to some analysts, “One reason for the declining business: A number of retail buyers are turning to cryptocurrencies like bitcoin to store money during periods of stress.”
And of course there’s the stock market, which seems to make new highs every day and gold ETFs. “Investors have poured more than $8.5 billion into State Street ’s gold ETF, the largest gold ETF, since the end of 2015,” writes Yang.
However, I can hear the words of my old friend and gold dealer, Burt Blumert, as I write this; “always take possession of your gold.”
Burt passed away in 2009 the same year Satochi created Bitcoin. Sadly, we are without Burt’s wise counsel concerning the cryptocraze. Would Burt think Bitcoin is gold 2.0?
I can only guess, but maybe the answer is in this quote. Burt wrote, “When buying bullion gold, do not buy medallions (privately minted). Only a government can issue coins (money). I am not being a statist here. All I’m concerned with is liquidity for the customer. Coins have it, medallions don’t.”
There was no greater libertarian than Burt, along with being sensible and wise. Computer code stored on your phone or laptop will not serve as liquidity for thousands of years.