The Wolf Den #253 - 46M Americans
Bitcoin Thoughts And Analysis
WEEKLY CHART
Yesterday's weekly candle close was interesting. While many view a candle with a small body and long wick up to be "bearish," that is not actually the case when it comes at the bottom of a move. Candle placement and context are everything in technical analysis, and candles often mean opposite things based on whether they occur at the top or bottom of a move.
This week's candle was an inverted hammer. At the top of a move, this would be called a "shooting star." As you can see, when this candle occurs at the bottom of a move, it is an indication that sellers continued trying to push price down further but failed. So even though bulls were unable to advance price very far, it is clear that they were interested in buying in this area and that sellers are weakening.
The interpretation of this candle depends largely on the next candle, which confirms the reversal by being green.
Further, the ideal inverted hammer falls below the previous candle, which is not the case for the one we are seeing on the Bitcoin chart. It is also preferable for the wick to surpass the previous candle, which it also did not. Still, the signal and concept are the same.
As you can see, this weekly candle still held the 50% retracement level of the entire move up from $3,800.
All in all, not a bad close on the weekly.
DAILY CHART
It is still all about 42K, in my opinion. As you can see, there is a symmetrical triangle forming, after the large move down. This could be construed as a "bear pennant," although this triangle is much larger than most pennants. Either way, we now have a descending resistance and ascending support that are rather clear, and can be used to help determine the future trend if either breaks. Keep this pattern in mind. A break above the resistance would signal a move back to 42K to test that area. A break of support and we could be heading back down to the recent lows or further.
BTC confirmed another bullish divergence with RSI on the daily, coming out of oversold. Confirmation came with a clear "elbow up" on RSI. This is the second bullish divergence, with a hidden bear div in between, which is now invalidated by the fresh bull div.
At the top, we saw multiple bear divs before the ultimate drop, so we could be seeing something similar here. So this does not mean price cannot go further down, but this does indicate that Bitcoin is "bottoming,' which is a process. We know that RSI will eventually head back from oversold to overbought, but that it took more than a year to get back to oversold after the bull run.
Also, note that any further movement up here could give another hidden bear div, so we really need to see a real push.
12-HOUR CHART
The same oversold bull div confirmed first on the 12 hour chart, a half of a day before the daily confirmation. We love to see divs build from lower time frames to higher, so I will be watching this as well.
BOTTOM LINE ON BITCOIN - The trend remains down until 42K is broken, and that is just the first step. There are plenty of signs of a bottom starting, but it would be unwise to assume that we have finished correcting with any certainty.
Altcoin Charts
I have almost no interest in altcoins right now, because I have minimal confidence in Bitcoin. A few of you have asked about DOGE, so I will take a quick look here. As I have mentioned, I think alts will trade higher than they are now in the long term, because I am bullish on crypto markets. If you are an investor, I can definitely see buying these on sale, if you are willing to see them drop further if the market continues to correct. As a trader, seems better to sit on your hands.
DOGE/USDT
This is what I am seeing on DOGE - a clear ascending support and a clear descending resistance. A break of either should give us some more confidence as to where the next move is headed. If you are bullish, looks for a break on volume of the descending line, which would theoretically target the all time highs with enough time.
How To Margin Trade
This is a great piece that I had written for the blog a few months ago on margin trading. As you know, trading with leverage is NOT for beginners and it should be used responsibly. If you are going to margin trade, here are some no nonsense pointers on how to do it safely.
Ripple Is Pulling Ahead In The SEC Lawsuit
The court has delivered another blow to the SEC
A month and a half ago, Ripple won a small victory over the SEC in their lawsuit that allowed them to scrutinize the SEC’s internal dialogue. Ripple has now won another small victory in the battle. The presiding judge ruled that the SEC cannot look at Ripple’s legal advice on whether XRP is an unregistered security. Since Ripple was not given fair notice and the lawsuit arrived spontaneously, Ripple’s internal legal advice will remain privileged, a win for Ripple which may have made a huge difference had the decision gone the other way.
So far, the SEC has continued to fall behind Ripple, which is overall good news for the market’s maturation. Despite the love-hate relationship everyone has with Ripple and XRP, I don’t see the SEC winning this lawsuit to be a net positive for the crypto space. It may damage the coin you hate, but its collateral damage could easily impact an altcoin that you are passionate about. It’s better for the space to grow through the free market, not at the whim of a powerful regulatory agency from one country that others around the world already disagree with.
Bitcoin Sponsored Race Car Finishes In 8th Place
Bitcoin had a good weekend at the Indy 500. Rinus Veekay, the driver powering the Bitcoin car, finished 8th, and the car owner, who also competed, finished 5th - respectable numbers out of 32 competing racers. The Bitcoin car was ultimately a brilliant advertisement, designed to push Bitcoin adoption and to be an opportunity for the community to root for something other than Bitcoin’s choppy price action. Strike partnered with Ed Carpenter to make everything behind-the-scenes work and to male payments Bitcoin-friendly.
According to Jack Mallers, the CEO of Strike, “Ed doesn’t want to race for potato chips or soft drinks at the Indy 500. This year, Ed is racing for human freedom, financial literacy, financial inclusivity, and is using the platform he’s earned throughout his career to promote the most powerful message possible in pushing humanity forward.
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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. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.