The Wolf Den #2. Bitcoin, Alt Trades, Trading Tips, Upblock And More
Bitcoin Analysis And Thoughts
Bitcoin has been consolidating for the past week - price is within $250 of where it was last Tuesday when I published the first edition. I presently do not have an active Bitcoin trade (I still have my long term holds, as always), as I entered at $6,900 and exited at monthly resistance between $7,500 and $7,700.
MONTHLY CHART
As discussed in last week's edition, I was hoping for Bitcoin to close above the key $7,777 support to signal that further price appreciation was likely. This is where I closed much of my position from $6,900. It was not to be, although price did manage to break the line temporarily on smaller time frames. The monthly candle closed at roughly $7,550, which is where I exited the rest. For now, I will be watching the aforementioned level to see if it flips to support and watching the lower level at $6,540 to see if it holds as support. Very simple from a macro perspective. Chart shown as of yesterday.
WEEKLY CHART
Price remains in a descending channel on the weekly chart, as discussed last week. I recently noticed a key ascending support and resistance line that I wish I had found before. It acted as resistance on the key breakdown in the low $9000s. The good news about ascending resistance lines is that they continue to climb - so they never really need to be broken again for price to continue up. The key pattern on this time frame remains the descending channel. Chart published yesterday.
4 HOUR CHART
The 4 hour chart is where the action is this week. As you can see, price printed an inverse head and shoulders, broke the neckline at $7,375, retested it as support and then moved with nice volume all of the way up to $7,870. My anticipated target of this move was a bit higher, at the next blue line, which is in perfect confluence with the 38.2% Fibonacci retracement (green box). Shorters ultimately front ran this area.
At present price is back below the neckline of the IHS. Much like last week, we are now watching the $7,375 line. Price has also formed a descending channel, which statistically is likely to break to the upside. If this happens, I will once again be watching the area of the green box.
COMPOUND FULCRUM?
There is a rare pattern that is potentially forming on the Bitcoin chart, which is worth discussing for academic purpose. The pattern is called a "Compound Fulcrum" and forms as a head and shoulders that is likely to break up instead of down. This pattern is valid when it forms against a key resistance - in this case the descending line from the recent high around $10,500. We do not often see these, and they rarely play out, but it's a cool example and something worth watching.
Why Exposure To Bitcoin Reduces Overall Portfolio Risk
This is a spectacular statement from Venture Coinist and Ari Paul on why every portfolio manager and institution should have exposure, even if only minimal, to Bitcoin and cryptocurrency. The basic idea is that risk managers generally look to diversify their portfolios and seek the rare opportunity to expose themselves to assets with more idiosyncratic risk than systematic risk. Systematic risk describes an asset that largely moves with the global economy or market as a whole. Bitcoin and crypto are largely uncorrelated to other markets. So investing in Bitcoin with a small portion of the portfolio offers idiosyncratic risk, which Ari Paul describes in the video as the "Holy Grail of investing." Watch the video!
Altcoin Trades
Altcoins continue to look promising, as numerous coins have done 50%+ moves in the past few weeks and months. As always, a significant Bitcoin move can ruin the fun, so I am maintaining relatively tight stop losses and exiting positions at any point where I feel Bitcoin could ruin them. For this reason, I have been seeking trades near support, so that they are invalidated quickly if price goes against me.
Risk management is what matters. Don't forget it when trading alts. Here is a brief list of coins that I am presently trading - MATIC, ERD (not discussed in newsletter), WPR, ADA (not discussed in newsletter), ARPA, DOCK and FTM. This list is fluid and changes daily. I am watching ETH, XVG, TRX, and LINK. Note, the TRX and FTM setups from last week's newsletter are still valid - TRX is waiting to be triggered and FTM is back at my entry.
A number of trades that I was watching have already given me my entry in the past two days - I was hoping that they would remain dormant until I could share them. However, they are still largely look great.
MATIC/BTC - 12/1/2019 ENTRY
I have been watching MATIC ascend for weeks, missing multiple entries by a few sats at each level of support. Entry now is risky after it has already gone parabolic, but I am willing to take a position in case this continues to all time highs. I am in on the retest of resistance as support, at 348 sats. Chart is from yesterday, but can be updated by clicking on the link and hitting the "play" button.
The MATIC 4 Hour chart shows that there was significant bearish divergence (red arrows) with RSI on the move up, which finally played out at the top. Price has now printed and confirmed hidden bullish divergence (a sign of likely continuation, black arrows) in confluence with horizontal support.
UPDATE - If you are following this coin, you know that it has already taken off, and is presently trading at 411 sats, an 18% gain from my entry.
WPR/BTC - 12/2/19 ENTRY
The WPR Daily chart looks ripe for a potential 100% move, assuming Bitcoin remains stable and altcoins continue to shine. Price is attempting to flip a key resistance back to support, at 117 sats. That is my entry.
The 4 hour chart shows that price is moving in an ascending channel and is presently at the bottom. I am placing a stop loss below this channel, and will continue to raise it with price, assuming we see continuation to the upside. I LOVE setups like this, because I can enter a much larger position with a tight stop loss. Why? Because my idea is invalidated with a drop of a few sats and because I can continue to raise the stop into profit if it goes my way.
Open the link and hit the "play" button to follow the trade.
ARPA/BTC - 12/2/19 ENTRY
I shared this setup in Discord yesterday, but failed to publish it on TradingView. The premise was a breakout of the descending wedge, so I entered at 149 sats. Price actually continued down to 147 for a perfect retest of descending resistance as support. Further, as you can see in the setup below, RSI also broke resistance. At present, the key 154 level has also been broken and retested as support. My initial targets are in the mid 170s, although I think this could go much further.
You can click the link below and push the "play" button to advance the chart.
DOCK/BTC - ACCUMULATING
I am adding this DOCK setup, because it is clearly in accumulation and likely to break up sooner rather than later. I have been buying around the green box, which has been a key level for price action in the past few weeks. My average entry is 114. Price is currently ranging in the blue zone and is holding the top half above the equilibrium (EQ, dashed line). The safest entry would be a break above the top of the range and retest, around 127 sats. My stop loss is below the blue zone.
LINK - ANALYSIS AND A LESSON ON BIAS
The tweet above is the beginning of a long thread (a few weeks) of analysis on LINK versus USD. You can scroll back a bit further to see the analysis vs. BTC. This was one of the clearer short setups that I have seen in a long time, which has followed through closely to the analysis that I offered. I do not have the ability to short alt coins, so this is not a trade that I was able to take.
The reason that I am writing about this is the exceptionally emotional responses that I received from the infamous "LINK Marines" when I dared to post an unbiased bearish (but still only short term) analysis of their beloved coin. I received endless hateful and trolling tweets by people who refused to believe that even a small retrace was possible on their asset of choice. What's the point? EMOTIONS WILL LOSE YOU MONEY IN TRADING. If you find that you can not view a trade objectively, you should not be taking it. LINK fans should have salivated at this opportunity to buy the coin cheaper - my analysis was to their benefit.
Below is a chart of where LINK is presently trading on 12/2. I am still considering long entries in the white zone below, although I believe we will see a bounce to retest the pink line as resistance first.
An update for 12/3 - price is already retesting the pink line as resistance, which is what I was expecting to see as of yesterday. If it breaks that line, I would consider an entry on a daily retest as support.
FET/BTC - COMPLETED
I posted this trade in last week's newsletter and it went exactly as planned. My limit orders filled at my take profit of 793 sats on November 28th. My average entry was 568 sats (equal entries at 520 and 616), so the trade closed with a profit of 39.6%. A Happy Thanksgiving!
VET/BTC - COMPLETED
I shared this trade weeks ago in my trading journal on CoinTelegraph. As discussed, I kept 10% open for the higher targets. I closed the trade yesterday when it crossed 102 sats, for a gain of 104% on the final portion of the trade. It pays to zoom out to larger time frames and be patient.
Upblock - Fundamental Analysis For The Masses
Knowledge is power - this is apparent when you visit Upblock. Last week, a couple of old-timers on Crypto Twitter, “Crypto Bulldog” & “Blackbeard” launched their latest venture to help people with their investing decisions by preparing easy to understand, in-depth & most importantly UNBIASED Fundamental Analysis Reports.
Their vision is simple: give every user, regardless of their experience in cryptocurrencies, the opportunity to bundle all of the necessary information for their next investment decision in one place.
Doing proper fundamental research is time-consuming and hard. Imagine trying to figure out the future success of a cryptocurrency without all of the transparency that traditional markets offer. No quarterly earnings reports, sales forecasts, or accurate company details. Upblock created their own research process to fit cryptocurrency related projects.
By reading Upblock’s reports, you can jump-start, improve & ease your research-related tasks and save dozens of hours spent trying to find relevant information.
You can also sign up for their platform for FREE and favorite any project you want to keep track of. Once they update a particular report you are interested in, you will get an email notification. They are offering periodical updates to their reports to provide people the most accurate, unbiased reviews out there.
This is in no way a paid endorsement - just a platform that I was introduced to.
Tip - Take A 3% Profit On Every Trade FOR A MONTH!
Taking losses is difficult. One of the hardest things to learn as a trader is how to set a stop loss and accept the hit to their portfolio when it fires. We have all experienced it.
What few traders talk about is how difficult it is to SELL. I would argue that taking profit is far more difficult than taking a loss. How many times have you watched an asset's price rise, failed to take profit, and then been paralyzed as price dropped and turned into a realized loss. Should you have sold before your target and locked in profit? Should you have moved your stop loss up to breakeven? And how many times have you seen price reach your target - but you decide that price can go even higher and choose not to sell, only to see price drop once again.
Selling is hard. My mentor Christopher Inks once taught me a valuable tactic - he told me to teach our students to take profit at a 3% gain on every trade (when possible) for an entire month, no matter what. I thought he was absolutely crazy considering the opportunities in the crypto market at the time. However, I vowed to test it myself and found it to be an extremely valuable exercise. First, consistent small gains compound very quickly and can result in tremendous profit over a relatively short period of time. More importantly, this exercise teaches traders the value and importance of taking profit, regardless of FUTURE PRICE ACTION. It kills FOMO (fear of missing out) and eliminates the greed that is inherent in the human psyche - the urge to squeeze a bit more profit out of an already successful trade.
Try it and let me know how it goes!
Interview With Voyager
We sat down with Scott Melker, the Wolf of All Streets, to talk crypto trading and more.
It's no secret that Voyager is my favorite new exchange for buying Bitcoin - while Coinbase continues to raise fees, Voyager has made trading commission-free. I met their entire team at the World Crypto Conference in Vegas, and they asked me a few questions about trading and my DJ career. Some gems in this one.
Charity - The Miracle On Main Street
Welcome to Amazon Baby Registry!
My wife is a member of The Junior League Of Gainesville, and they are hosting the #MiracleonMainStreet this Saturday. In its 29th year, this event benefits families in the community who do not have gifts for their children over the holidays. Please consider purchasing an item from the Amazon wish list linked above. I will be there with my wife and kids, helping to hand out toys and make sure that families get everything they need.
My Preferred Platforms And Tools
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions.
This is where I invest, commission-free. They now let you earn 3% interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
URL: http://go.onelink.me/4gTR/ba4cd7d3
Rewards Code: WOLF25
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
I use this platform more than any other and have the top tier account (yes, I paid). This is where I do all of my charting and TA and set my alarms to let me know when to check a chart. If you are not using TV, you are not a trader!
https://www.tradingview.com/gopro/?share_your_love=ScottMelker
Uncensorable .crypto domains (like scottmelker.crypto) that cannot be removed by hostile actors.
Gives us the ability to simply send Bitcoin & alts directly to a .crypto extension. Eliminates the confusion of long addresses.
https://unstoppabledomains.com/r/thewolfofallstreets
ESSENTIAL platform for doing taxes. I execute thousands of trades a year and they calculate what I owe accurately within a few minutes. It’s amazing and cheap ($29.95). They were kind enough to offer 10% off to my followers.
BlockFi
BlockFI is where I personally store part of my long holdings. They offer up to 8.6% annually, compounding, depending on the asset (BTC, ETH or GUSD), which is much better than any legacy savings account or investment. You can get $30 in FREE Bitcoin using my code once you deposit $100. Quite literally free money.
Code: melker30
https://app.blockfi.com/signup?ref=melker30
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.