Today I will let you in on little gem that is developing an ambitious decentralized ecosystem. The name is Komodo.

The Komodo team has been developing a number of interesting features during the last year. This includes a truly decentralised exchange called BarterDEX which, unlike many of the new exchanges falsely claiming to be decentralized, allows users to perform atomic swaps for direct crypto-to-crypto transactions, removing all middlemen in the process. A cool feature lets users place an order for multiple coins using the same funds depending on pre-defined criteria.

In order to increase the security and efficiency of the platform, the team opted for a delayed Proof of Work (dPoW) consensus mechanism, whereby the platform attaches itself to the Bitcoin Blockchain by notarizing the blocks. All the projects and ICOs that attach to the platform become attached to the KMD Blockchain, allowing for lower transaction fees as Bitcoin transactions have become quite expensive to operate.

The notary nodes provide an extra level of security, augmented by the use of ZCash privacy technology, as well as a funding means to allow the project to be self-sufficient. Moreover, their dICO app which stands for decentralised ICO, offers businesses a legitimate method to raise funds in a decentralised and anonymous way via its crowdfunding DIY package. Finally, to encourage users to join and use the platform, a 5% reward is given to hodlers of KMD on a wallet address.

Technical Analysis

After rising from just over 6 cents to $14 in 2017, Komodo has been in correction mode throughout the year and is now looking for a bottom to complete the bear trend. The corrective move this year shows a clear 3-wave pattern as an ABC move down, with wave C looking to complete in the coming months. 

Elliott Wave analysis KMDUSD – November 2nd 2018

As shown in the above chart, I have two counts. My primary count sees KMD having one more low to go before ending this correction which should drop near the 61.8% retracement of the full wave (1) move. In the alternative count, KMD has already completed wave C given the double bottom in September, and hence the full correction from the $14 peak in December last year. However, this is not my expectation as the crypto market is still bearish, so I am being cautious on this count.

Either way, the price needs to choose a direction before a count can be clearly defined in the coming weeks. Focusing on the shorter time-frame, I see wave (iv) having potentially completed as a Flat wave. In my previous post, EOS Short-Term Analysis: Nearing a Bottom, I introduced this Elliott Wave pattern showing two distinct types known as a Regular Flat and an Expanded Flat. There is also a third type of Flat which is much less common than the latter two and is more frequently seen in illiquid markets.

Elliott Wave Corrective Pattern – Running Flat

Running Flat

There are a number of rules in EW theory for a Running Flat to be valid:

  • Corrective ABC pattern, waves A and B move in 3 sub-waves, wave C moves in 5 sub-waves
  • Wave B terminates beyond the start of wave A
  • Wave C doesn’t reach the end of wave A

[Amended on 4th November] The KMDUSD pair is exhibiting a complex wave 4 structure that can play out in one of two ways. The first one labelled in brown in the below chart shows the price having already completed wave (iv) in a complex WXY pattern, with each wave made up of 3 corrective sub-waves. In this scenario, we will see Komodo dropping directly form the current level and start the last leg which should complete this bear market. This count is confirmed once the price breaks below $1. The second structure labelled in blue gives Komodo a little more room to move higher from here and complete wave c of (iv) as either a Running Flat, stopping just below the top of wave a, or as an Expanded Flat to end beyond the top of wave a. 

Elliott Wave analysis KMDUSD – November 4th 2018

Price Forecast

My ideal target is for KMD to drop to one more low before ending this correction which should hit the 61.8% retracement of the full wave (1) move at around $0.50. As shown in the above chart, the price has dropped in only three waves and still needs that 5th wave to complete the larger correction.

Given that the price has reached the 50% retracement of wave (i), there is the possibility that wave (2) has already ended. But for this to hold, certain conditions need to be met. In fact, the price would need to rise in a 5-wave move from the recent low labelled b, and be followed by a corrective 3-wave move down without undershooting the $0.90 low. If that patter plays out and the price follows with a strong rally, I will consider the bear market over for Komodo. Until then, I still see further downside in the medium-term.

I will finish with one remark. What really intrigues me about Komodo? Its future projection. If the price movement ends up confirming this correction as a wave (2), we will then enter an impulsive wave (3) rally which will yield an end-to-end ROI in the range of 1500-1800x! That’s the highest potential gain I am seeing in all of the Top 25 cryptos by market cap at the moment. Stay tuned for more.

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Responses

      1. Matthias Post author

        Thank you both. Short term patterns are always hard to get right, hence why it’s important to read the commentary that goes with the charts I post, where I provide alternative counts (though the difference is usually minor). However, I am a lot more confident about the longer term bottom.

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  1. Tony Lee

    Nice review on KMD, i’ve always been a fan of their BarterDEX. However i feel if has taken them a bit too long and other blockchain has overtaken the space. Good review and looks like things are on the up for them.

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    1. Matthias Post author

      Haven’t used BarterDEX so it’s very likely the case. I feel they lack a bit on the marketing/promotion side which could be why the platform isn’t having the traction they hoped for. We’ll see if that changes.

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