The Wolf Den #38 - Trades, Requests, Lessons And VPVR
Bitcoin Thoughts
I remain long with an average entry of $5,930. I ALMOST exited yesterday but realized that price was on support and took my chances. This really played out just as I was thinking it would.
I shared this 4-Hour chart on Tuesday. As you can see the green 9 on TD Sequential did, in fact, lead to a retrace to support. That's what was generally discussed. Beautiful bounce off of the ascending line - now we need to see follow through and a strong move above 7K. If that area flips to support, this becomes really bullish.
This was the daily chart that I shared. Price did, in fact, bounce off of the bottom of the ascending channel (NOT A BEAR FLAG, as I said) and seems to want to continue up for now. I want to see an even stronger move to the upside to give some distance from that ascending line.
Zooming into the hourly really shows us what's going on and it still looks very bullish. Price rose, formed a descending wedge (bullish consolidation) and then broke out, retested and continued up. Perfect TA. We now want to see it hold that red line, which is the previous local swing high.
Bidao
I have spoken a number of times with the team at Bidao and made a small investment myself, so I thought it was worth sharing some information on what they are doing.
Bidao is building a decentralized stablecoin. As many of you know, there are two kinds of Stablecoin, bank backed (for example, Tether, where the money created in tokens represents USD in bank accounts) and decentralized stablecoins, such as DAI, that use Ethereum as collateral.
Bidao is in the process of building their decentralized Stablecoin, by using different collaterals to eventually become blockchain agnostic, using different chains. At the beginning, the focus will be on the collateralization of BNB and other assets.
Bidao has an integration with Chainlink that will use Chainlink’s secure and reliable price oracles to power the Bidao stablecoin. I know that some of you love Link!
In the initial iteration, Bidao will use and support the ETH/USD, BTC/USD and LINK/USD price reference data contracts already running live on the mainnet. This will allow Bidao to expand the different types of collateral users can choose when taking out collateralized debt positions (CDP) via the Bidao protocol.
Bidao is now using Chainlink’s Price Reference Data Contracts for ETH/USD, BTC/USD and LINK/USD as secure and reliable price feeds for supporting BTC, ETH, and LINK as new forms of collateral backing the Bidao stablecoin BAI. These Price Reference Contracts guarantee that the pricing mechanism used in the Bidao ecosystem is highly decentralized, secure and reliable to keep up with network demand.
The decentralized oracle networks sourcing data for both the BTC/USD and ETH/USD price feeds consists of 21 highly secure independent oracles, while the LINK/USD consists of 7. With 7 different aggregators existing on each oracle network, they can be certain that Bidao Stablecoin is powered by prices that reflect market wide price discovery based on sourcing from all the top liquidity sources. This insures Bidao is resilient against oracle manipulation, specifically attacking low liquidity exchanges to manipulate prices.
Right now is an opportune time to get in if you are considering it. Staking is at 30% and it goes down by stage, until the end of the ICO - after it stays at 3%.
This is NOT a paid advertisement, as I know some of you will ask. It's an interesting project that I have researched and feel comfortable sharing. As always, do your own research and make your own financial decisions.
The Wolf Of All Streets Podcast Ft. Dr. Jeffrey Swisher
Jeffrey Swisher is the Chairman of the Department of Anesthesiology at California Pacific Medical Center in San Francisco and goes into the hospital to treat patients every day. Dr. Swisher and I discuss the balance between protecting yourself and caring for your patients, the prevalence of false negative COVID-19 tests, the importance of social distancing, the immense risk that health care workers are taking treating COVID patience with and without proper PPE, why most of what we heard from the media about the virus is a myth (only kills old people, just the flu etc.), why a vaccine is a long shot, the poor handling of the crisis by the US government and what it's like to be the brother of famous tech personality Kara Swisher. If you want facts about the virus instead of rumors, this is a must listen.
Trades
ICX/BTC (TUESDAY TRADE)
Follow up from the Tuesday trade when price was sitting on the blue line. This still looks good to me above the black line, but I assume many of you already entered and are well up! It looks to be consolidating for another move. Fingers crossed.
MATIC/BTC
Nothing has changed since I posted this on Tuesday, but wanted to point out that it continues to push against descending resistance. This could really pop if it breaks.
USOIL
I am short oil from $25.90. Clear move into a key level of resistance, worth a shot with a stop above today's high (also the high here on the monthly chart shown below). Targeting the bottom of the channel for a mega long. I want to short it down and then buy if bullish divergence confirms here on the monthly and the channel bottom holds.
WRX (TUESDAY TRADE)
This was one of the few setups I shared on Tuesday. You can see the original post below (and can hit play to see the magic!). Too late to enter now, but wanted to share a followup! Absolutely went bananas.
Moving Past Losses... And Wins
I love this tweet. It touches on an incredibly important lesson that traders often fine painful to learn.
WHAT HAPPENS AFTER YOU CLOSE A TRADE IS IRRELEVANT! I used to struggle very hard with revenge trading - entering back into a bad trade on an asset, simply because I had lost and wanted to get my money back. This is irrational - it makes no difference if you make a gain on BTC or ETH or USOIL. Revenge trading an asset over and over when there is likely a better opportunity elsewhere is a guaranteed way to lose money. Once you have lost, forget about it, take a step back and reevaluate when you are no longer emotionally attached to the trade.
This cuts both ways. When you take profit, price often continues in the direction of the trade and you feel like you "sold too early." This used to cause me to buy in again higher, only to see price reverse. This almost ALWAYS ends up being the top right when you buy back in, right? Once you have taken profit at your target and executed your plan, it makes NO DIFFERENCE what happens. Buying back into the same asset because of FOMO will inevitably erase the gains from your previous, well-executed trade.
I had a rule for many years (which I am not as consistent with now, to be honest) that any time I closed a trade (win or lose) I would close that chart for 24 hours before allowing myself to check it again. This did wonders for solving the problem. You should try it.
VPVR - Volume Profile Visible Range
This is a quick overview of an indicator that I have used quite a bit in the past and will be incorporating in some of the chart requests. There are people who use this indicator as the core of their strategy. I personally use it for a general idea of the areas where volume was heavy and support and resistance are likely to be strong.
The volume profile is an advanced charting Indicator which is available on a Tradingview Pro subscription. It displays trading activity over a specified period and plots a histogram on the chart which reveals dominant and significant price levels based on volume and in essence gives a clear indication of Supply or demand at a certain price rather than volume in a certain period.
The Levels of Significance
Point of Control (POC) — The price level for the time period with the highest traded volume. This is a blue line on my charts.
Profile High — The highest reached price level during the specified time period.
Profile Low — The lowest reached price level during the specified time period.
Value Area (VA) — The range of price levels in which a specified percentage of all volume was traded during the time period. Typically, this percentage is set to 70% however it is up to the trader’s discretion.
Value Area High (VAH) — The highest price level within the value area.
Value Area Low (VAL) — The lowest price level within the value area.
You do not need to use all of these when you set up VPVR. I really only look at the obvious nodes on the right and the point of control. Here is an example using the Bitcoin 4-Hour Chart.
Look at VPVR on the right. The blue line is the POC. This would indicate that $5,300 is strong support - and you can see that price action agrees, considering that is the exact area where price consolidated before moving up. You can also see that there is a high volume node on the right at the current price - strong resistance. Not coincidentally, that is in confluence with all of the recent price action in the $6,600-$6,700 area. As you can see, a break up here would be into an area with very little resistance on VPVR, so this area would flip to strong support, much like the POC. Very easy to use visually and great when it agree with your other TA!
Chart Requests
ALGO/BTC
I am not seeing much cause for excitement on ALGO at the moment, although I think that it will reverse and do well if alts in general start to rise. At present, it is below a key area of resistance (2517) and it below the heavy volume nodes and POC on VPVR. I would honestly like to see it break the descending black line and get above horizontal resistance rather than trying to catch a knife. Flipping 2517 would be the first area I would consider a buy.
BNB/USDT
I have shared this chart a few times and very little has changed. Honestly, almost every alt/USD chart looks similar. This held a key area of support at $8.53 and has bounced nicely since, along with Bitcoin. It retraced it's entire move up well past the 78.6% level, so that "should" be the bottom. At present it's moving nicely but has resistance up ahead. Personally, I would want to se this above $13.86 as support before I would consider it now... a lower entry would obviously have been preferred!
BSV/BTC
BSV still looks good. Price broke out of a clear descending wedge - bullish consolidation after its massive move up a few months ago. The target of this breakout would be the recent high at the top of the wedge. You can also see that it bounced perfectly out of a demand zone (blue area) and is now trading at a key level on VPVR. Any move up here should not find too much resistance until the levels marked. This looks like bullish consolidation to me on the daily.
DJI (DOW JONES)
It's only Thursday, but that's a hell of a rejection for now at the 2018 low - as predicted, it's strong resistance. Last week failed to close above, and this week started there, wicked above and has fallen since. A close like this would be bearish.
This is a bit strange to chart in general - it's an average, not really a trade asset. But still interesting to see how it moves.
Zooming out a bit, these are the next general areas to watch, if the recent lows fail.
ENJ/BTC
This one is a tough read for me, honestly. It has been very sporadic, with large moves up and down that are hard to determine on the chart. For now, I think there should be strong support around the blue line, which is also in confluence with the 21 and 50 EMAs (as they move up). All of the EMAs are still pointing up on the daily, which is bullish. The levels are tough with so much price action, but the purple area where price is trading seems to be a key support. I could see an entry there if you are into this coin. I would prefer down at the blue level if it falls.
ERD/BTC
ERD is still near it's all time low. To become interested, I would want to see price trading above 15 as support and breaking out of the descending white channel. Pretty simple. For now, you are just trying to find a bottom.
ETC/USD
I always seem to defer back to the weekly chart when this is requested, because the major levels are clear. Price seems to be making a bit of a bear pennant (easier to see when you zoom in), so I don't see an immediate reason to enter on a long time frame, personally. There may be a trade here if you zoom in. For now, EMAs are turned down on the weekly and this looks like a relief bounce. Of course, it's going to really do what Bitcoin does because this is the USD pair!
ETH/BTC
This is really the same as last week, although it seems to have broken out of it's immediate downtrend by passing through that black line. Still, it's really flat and waiting to make a move. I have orders sitting in that long rectangle and have for quite a while. That's where I would ideally like to buy, but it could be bottoming and those orders could easily get front run here. All 3 EMAS are pointing down at the moment, with a possible death cross coming between the 50 (blue) and 200 (red). However, I view this as a lagging indicator, more a result of what has already happened than a prediction of what is to come.
ETH/USD
Same charts I shared last week - daily and weekly. The weekly looks to be holding the blue support and bouncing, which would be very bullish. That is basically a huge bull pennant or symmetrical triangle. If support holds, we should see a break out of the top eventually. The daily also bounced off of the descending channel that signaled an end of the major downtrend, which is bullish. This will do whatever Bitcoin does because it is a USD pair.
LINK/BTC
LINK is really interesting here. Price is hovering just above the most important ascending support line on the chart. The immediate resistance is the blue line, which has failed to slip to support in the past few days. The descending black line is another support that looks like the neckline of a potential (but ugly) head and shoulders. Basically, if this holds that ascending black line it should bounce hard and continue up. A break down would be bearish.
LTC/USD
This obviously looks a lot like the Bitcoin chart. For now, I would say this looks good for a large cap. Anywhere above the red line at $36.417 is bullish in my eyes - a key are of resistance flipped to support. Also, the bounce out of demand (white channel at the bottom) and off of the bottom of the descending broadening wedge are both bottom signals. If Bitcoin behaves, this could do really well.
MCO/BTC
The weekly chart is really interesting and looks quite bullish. No matter how you draw the descending resistance from the all time high, price has clearly broken out (you can see 2 options). Price also recently held the key ascending blue support and bounced off of it hard. This coincided with a bounce off of horiztonal support as well. This was a very clear trade at 5070, but is a bit harder to judge now as it's in no man's land. The daily is overbought on RSI (not shown) and has a bit of bearish divergence. So this could retrace some before continuing up. Another bounce off of that ascending support would be awesome if it goes there.
NEO/BTC
If you have been with me a while, you know that this was one of my favorite setups a few weeks ago and it completely failed. There was a massive inverse head and shoulders breakout and I expected serious bullish movement. I took a loss on that trade. NEO does looks interesting again, but not on that same level. It is currently holding a key level of support. I would personally like to see it break the descending blue line first and remain above the current level. Key areas of likely resistance are marked with black lines.
NFLX (NETFLIX)
Netflix is predictably one of the best performing stock in this economic downturn - people are sitting at home watching TV. It was actually trending down before the crash and has since risen. This was my biggest equity position in my trading portfolio and I was up almost 400%. I actually sold THIS WEEK. Honestly, I only sold because I wanted to lock in an incredibly multi-year trade and get more cash. I could see someone still buying this, but I just don't believe that even the best stocks are likely to swim against the tide if things get worse for the economy. From a chart perspective, it had a huge fakeout on this massive bull pennant. Now it is back above and holding as support, although this candle looks like exhaustion for now (closes tomorrow). Could be a shooting star.
NRG
This is a cool chart. There was a clear double bottom on the left that broke out and hit it's target, and now we had a clear double top that broke down at $32.63 and hit it's target below - which was in confluence with a key support level at $19.19. Now price is back in no man's land, struggling with the 200 MA on the weekly chart. I would not mess with price below that line, and really would like to see it back above $32.63. This looks like it has followed the Dow, so if you think the market will drop further in the coming days, this will likely go with it.
OGN/BTC
Nice moves today, bouncing from the EQ (equilibrium) of the trading range up to the top. However, price has been rejected thus far at the top of the range. The wick above the range is a bearish SFP (not confirmed) for now, so you really want to see price trading above the range before considering a position now. A flip of the range top to support would be my ideal entry.
OMI (OWENS & MINOR)
Trading in the top half of a range after the bottom of a large move down. For now it has been rejected here on the weekly at the range top and has a bearish SFP above the previous swing high. You would not want to see the weekly close below the range top. If it does, I would expect either a move down or some consolidation for a while below resistance. The best trade here is the one shown by the top red line - a retest of the range as support and continued movement. For now, this is at resistance so it makes for a tough entry.
SEDG (SOLAR EDGE)
Fibonacci levels are drawn from the dead bottom to the top before the crash. Price is currently finding temporary support at the 50% retracement level but is struggling with the 50 MA (blue). Anything above the blue support line drawn is cautiously optimistic, although this seems to be moving with the market which I do not think it likely to hold for very long. Could be wrong. If this breaks the blue support, I would be looking for buys in the blue box - golden pocket down to the 70.5% OTE (Optimal Trade Entry).
TSLA (TESLA)
I have shared this a few times. On the positive side, this bounced EXACTLY at the 78.6% retracement level of the entire parabolic move up. When a parabola breaks, roughly an 80% retrace is expected. Got it.
This was also in confluence with the top of the multi year trading range (circled in blue). I did NOT enter here, but this is where I closed my short from $900, which was absolutely epic.
All of that said, I think TESLA is more likely to drop again than to rise. I could be wrong of course, but this monthly candle structure is not ideal, and this was really over inflated. If it drops to the top of the range again, I may entertain a long, depending on what the rest of the market is doing.
W (WAYFAIR)
Seems to be following the market a bit. I don't usually look at 4 hour charts for equities, but this does seem to be forming a bull flag after a nice move up. There was also a small hidden bullish divergence before the last 2 up candles. I would not consider this unless it breaks out of the little potential flag. I really like it more above the blue line.
XAU (GOLD)
Monthly chart, which is the one I usually focus on for gold. You can see that price continues to push hard against the top of the ascending channel resistance. $1,616 is still the key level for me. I would rather buy that as support than resistance... or a drop to the middle of bottom of the channel, which seems unlikely as people are clearly moving to gold during the meltdown.
There is also potential bearish divergence with overbought RSI. Worth watching, but takes ages to play out.
Fundamentally, gold should perform well when the economy is crashing. Watch for a monthly close above $1,616.
XMR/BTC
This looks decent. I have shared this many times in the past - clearly broke the major downtrend and has now retested that line as support. I want to see it above the red line again personally, but for a longer term position this looks like a decent bet to rise.
XMX/BTC
This is in a key area, sitting on the most major support on the chart. If you are generally bullish, this entire area could be a decent entry with a stop below that zone. Size your position accordingly. I would personally be waiting for a break of the descending line to signal the down trend is over.
XRP/USD
Looks somewhat like the Bitcoin chart when you zoom out - because it's the USD pair. Held the support of the huge descending broadening wedge, which is bullish. Bounce nicely from there. Currently at a key level of resistance (blue line at .176). Flipping that to support would be a nice move for continuation up. Need to close above it first.
The next area of major resistance is around the red line, which is in confluence with VPVR having larger nodes on the right. This will be a tough nut to crack if price gets up there. Tons of resistance from any perspective.
XTZ/BTC
Nothing has changed. Same chart I have posted a number of times, and I am still in this trade and slightly down from my entry. First, I want to see 2571 flipped back to support, then a move above the EQ (dashed center line) of the bull flag. This still looks very bullish to me because of the bull flag!
ZIL/BTC
Price is trading in a range and is currently near the bottom. Cool chart, shows a nice example of a bearish SFP (swing failure pattern) up top (red circle). Price wicked above the previous swing high, closed below and fell. Lots of sellers up there. We have potential more local bullish SFP in the green circle. I personally would like to see price above 62 and ideally breaking the descending line.
Phemex
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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.