The Wolf Den #178 - Psychology And Health In A Bull Market
Bitcoin Thoughts And Analysis
Bitcoin saw a quick dip last night, sending the community into a panic as usual. There were very clear bearish divergences across many time frames, so a drop was somewhat easy to predict, which I did very vocally on twitter within moments of it happening. As I pointed out, the move was likely coming but also was likely to be short lived, as potential hidden bullish divergences were likely following those bear divs.
DAILY CHART
As you can see on the daily chart, for now the price action we have seen over the past hours has largely been a blip. Nothing has changed much on larger time frames AT ALL. Always zoom out if you are feeling panicked.
6-HOUR CHART
The sequence of divergences is best illustrated on the 6 hour chart. As you can see, there has been indecision in the market. We had a bear div in overbought territory, usually a very reliable top signal. However, that was followed by a hidden bullish divergence, which effectively cancelled the bear div. Price went back up. Then another bear div at the top last night, which preceded the drop. Well, since then price has confirmed another hidden bullish divergence, a signal for continuation to the upside and for the end of the bear div. THE MOST RECENT DIV IS THE ONE THAT IS VALID.
These divs have been confirmed on the 6 hour and down. The 12 hour has a potential hidden bullish divergence after a confirmed bear div. The daily has a bear div and for now no hidden bull div to cancel it out. I think this is an area to proceed with caution in general as Bitcoin makes a decision. On lower time frames, the divs indicate we should not drop further for the moment.
4-HOUR CHART
This chart is a bit sloppy but fun to take a look at. Price has made a series of descending channels aka bull flags after the huge Tesla move. As you can see, price found support at the top of the most recent flag, even though the wick dipped lower. That's a bit of a bear trap. Price is once again struggling to break above $48,200, which has become the most important local level for many days.
The larger pattern is an ascending wedge, shown with the purple lines. That is statistically "bearish" but has been smashed to the upside more times than I can count during Bitcoin bull runs. So much so that I am almost view it as bullish.
At this point, I think we want to see price break 50K and close candles up there - that would be a huge psychological level that would get retail FOMOing in.
Altcoin Charts
Altcoins are bouncing with force across the market. Many people were liquidated or stopped out on positions that would now be in profit - the price action across the board looked like someone flushing out stops for a move to the upside. Right now it's probably "safer" to take smaller positions with wider stops to avoid this kind of action.
You can almost pick any altcoin right now and it is forming a reversal candle, with a long wick down and body on top. That does not mean they are all going to go up, it's just the situation right now. I am still remaining cautious here, because it appears the market could go either way for Bitcoin and alts alike.
Just a note - $POLS is up over 50x from the 10 cent entry and many multiples from other entries along the way. What a beast!
DUSK/BTC
I really like this setup, and it was something I almost posted last week when price was still below resistance. The current candle is working on another nice retest of that key level at 359 as support. You can also see that this support is in confluence with the 23.6% Fibonacci retracement level. It "should" hold as support. We also had a beautiful rounding bottom form which is technically breaking out at this same level.
A lot of positive signals here! You can use the drawn levels and Fibs as targets if this continues up. I would personally place my stops pretty far below the current candle bottom, just in case of another shake out.
I am NOT sure this will go up - I just like the opportunity to buy at support and take a small loss if I am wrong.
OMG/BTC
I shared this a while ago and it finally came to fruition. Price broke through resistance and has now tested that area as support. It is currently forming a potentially nice daily reversal candle. Lots of patience required to have waited for this setup, but I really like it here.
I would personally place my stops somewhere comfortably below the bottom of the current candle wick. I am NOT sure this will go up - I just like the opportunity to buy at support and take a small loss if I am wrong.
Poker, Trading & Life
I love this thread. I have written about the similarities between poker and trading a number of times, lessons that can be extrapolated to all facets of life. George tells a compelling story in this thread, definitely worth a read.
Here is an article that I wrote about poker and trading.
Free Crypto!
Friend of the Wolf Den John Serwach shared this awesome article with me on ways to get some free crypto. Check it out!
Another Analyst Predicts Bitcoin Over $200K
Kaleo, a popular crypto technical analyst, drew a Bitcoin price prediction chart based on scheduled halvings over two years ago. Its accuracy continues to amaze. In early 2019, Kaleo predicted Bitcoin would break all-time highs near the end of 2020 or early in 2021 which is exactly what happened. The chart works well because it maps the entire history of Bitcoin’s price logarithmically. According to the chart, we are a few months away from a yellow zone, where a cycle peak will occur at some point with a heavy initial sell-off after the ATH is met.
This remains one of my favorite charts because it represents a very middle of the road approach to Bitcoin price predictions. The chart is very close to the average of all major predictions which leads me to believe it has a higher chance of turning out to be accurate for this cycle.
If Your Stimulus Check Went To Bitcoin...
This is not a reason to dump your stimulus into Bitcoin, but if you did convert the first stimulus check of $1,200 into Bitcoin back in April and didn't sell, it would be worth about $9,000. If you converted it to Ethereum, your $1,200 would be worth $13,500. There is no doubt that a lot of the money being printed by the government will directly flow into crypto markets.
Mark Cuban Thinks Ethereum Could Be Better Store Of Value
Cuban talks about why he's bullish on DeFi in this week's Defiant podcast.
Mark Cuban is in the crypto news every week with his noticeably growing bullish sentiment towards the space. On the Defiant Podcast this week, when talking about DeFi, Cuban said that he believes that Ethereum is becoming a better store of value because of the rapid innovation. Specifically, his excitement for Ethereum revolves around smart contracts, lending to the creation of decentralized applications. In reference to DeFi and smart contracts, he said they are “sparking innovation and compounding network effects, are most importantly laying the foundation for “friction-free banking.” Mark Cuban is a huge fan of NFTs and left the interview with the statement that if both Bitcoin and Ethereum dip, he is buying more Ethereum than Bitcoin.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.