The Wolf Den #39 - Crypto, Stocks, US Gov Loans, Altcoins And More
Bitcoin Thoughts And Analysis
Bitcoin is only down 8.7% from $8,000, where the March 12th dump began. It is up 92% from the $3,800 lows. As I often mention, longing an uptrend is far easier and more profitable than shorting, because the maximum profit potential for a short with no leverage is 100% - price can only go to 0. If you had shorted 20K and exited now, that would STILL be a less profitable trade than longing from the recent bottom at $3800 to the current price.
As you know, I have been in multiple longs in the past month, making this one of the more profitable months I have had trading Bitcoin. Ever. I am still currently long on my most recent position from $5,930.
At the moment, I am looking for a retrace to the $7,000 area to add more orders.
MONTHLY CHART
The next key resistance is our old friend - $7,777. Price closed April just below $6,540 (these lines are meant more as zones, like I always say) but launched there. Basically we want to say April closing at least above $6,540, but would be far more bullish to close above $7,777. Then we would look for that to hold as support in May.
WEEKLY CHART
Nothing has changed on the weekly, except for some more bullish movement. I simplified this chart to show the immediate weekly resistance at $7,516 (that area). A descending wedge should statistically break to the upside (eventually) and target the top of the pattern. That would retest the 14K highs.
DAILY CHART
Key daily levels are shown in black. The red level is the top of the ascending triangle that I have shared many times and will be shared once again below on lower time frames.
TD Sequential (full lesson below) is presently showing a green 8 on the daily. If it continues to build and print a 9 tomorrow, this would be a short signal, indicating that this move up is done for the time being. Worth watching.
Adding to the above chart, we can add a supply structure on top and demand below. For traders who use this technique, these are the obvious areas of resistance and support. You draw these (this is the simple explanation) by finding the last up candle before a drop (supply) and the last down candle before a clear move up (demand). The idea is that there are orders left behind by the big move, so they are still there waiting to fill.
4-HOUR CHART
I have shared the ascending triangle (blue bottom line) a number of times. You can see that there were two fake outs below (red circles). Price dropped below temporarily before moving back up. This traps shorts who think that the pattern is breaking - it is purposeful and used by whales to fill their orders.
Looking back, the bottom red line seems like it may have been a better indicator of what was happening! We will look for both to hold as support for continued movement up, although a retest of the horizontal red line "should" be tested as support. It does not have to.
Right now, if you are looking to long, the 7K area could be a nice trade... if it comes back down there.
TD Sequential confirmed a sell 9 on the last 4 hour candle. If this indicator is correct, we should see retracement now and the local top should be in.
The Wolf Of All Streets Podcast Ft. Mark Yusko
If ever a guest has made me feel like a first year student in a Masters class, this is the one. Mark has to be the smartest person I have ever had the pleasure of speaking to, and in this podcast he breaks down EVERYTHING that is happening with the US government and world economy. I am not sure he even took a breath. I have listened to this myself 3 times in an effort to absorb his wisdom.
Mark Yusko, CEO of Morgan Creek and I discussed a multitude of topics in this whirlwind podcast. We talked about why Bitcoin is the only legitimately uncorrelated asset in the world and the only true free market, why the government should let "zombie companies fail," why Boeing should be shut down, the difference between Cronyism and Capitalism, the problem with stock buy backs, the culpability of the US government in the present economic situation, why stocks are more manipulated than Bitcoin, why Putin is the richest man in the world, and how retail should invest and why they fail.
As Mark said, "Human beings do two things really, really well - we buy what we wish we would have bought and sell what we are about to need."
We also howled together at the end...
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Ethereum
I chose to do a quick analysis on Ethereum, since it was clearly leading the market in the past 2 days. I shared chart requests for both of these on Thursday.
ETH/BTC
Beautiful move. As mentioned on Thursday, price broke the descending black line and looked to be bottoming. My orders were in the skinny blue box and missed - I was too greedy and did not capitalize on this move as a trader. That said, I do have Ethereum in my long holds.
The 21 and 50 EMAs both curled up since last week, and the 50 EMA avoided a death cross with the 200 EMA. Price closed above a key resistance level yesterday and has retested as support to the dollar today. Just a lovely chart! Bulls really want to see it hold the .0230 area as support. That said, after a move like this, retracement is expected. I would not view a break of that line to be so negative with all of those EMAs below. We could definitely see some consolidation soon before another move up, if it intends to continue.
ETH/USD
Another beauty! Bitcoin price rose and Ethereum beat Bitcoin - so that means a really big move on the USD pair. As discussed many times, price broke the immediate down trend months ago (the channel) and retested as support in the past weeks. Anything above the $160 area remain bullish after breaking resistance yesterday. A retest of that as support would likely form a pennant or flag, so I am adding orders to that area. Would love to catch that!
The weekly shows a massive bull pennant or symmetrical triangle. The bottom is flimsy after the price action a few weeks ago, but the key line is the descending resistance anyway. A break of that would theoretically send ETH to all time highs.
TD Sequential Lesson
I have occasionally utilized TD Sequential in my setups, so I thought that I would share a quick write up on how it is used. These are just the basics. Here is what it looks like on a naked BTC daily chart.
TD Sequential indicator consist of two components. TD Setup is the first one and it is a prerequisite for the TD Countdown – the second component.
1. TD Setup
TD Setup compares the current close with the corresponding close four bars earlier. There must be nine consecutive closes higher/lower than the close four bars earlier.
TD Buy Setup - prerequisite is a bearish price flip, which indicates a switch from positive to negative momentum.
– After a bearish price flip, there must be nine consecutive closes, each one less than the corresponding close four bars earlier.
– Cancellation - If at any point a bar closes higher than the close four bars earlier the setup is canceled and we are waiting for another price flip
- Setup perfection – the low of bars 8 or 9 should be lower than the low of bar 6 and bar 7 (if not satisfied expect new low/retest of the low).
TD Sell Setup - prerequisite is a bullish price flip, which indicates a switch from negative to positive momentum.
– After a bullish price flip, there must be nine consecutive closes, each one higher than the corresponding close four bars earlier.
– Cancellation - If at any point a bar closes lower than the close four bars earlier the setup is canceled and we are waiting for another price flip
- Setup perfection – the high of bars 8 or 9 should be greater than the high of bar 6 and bar 7 (if not satisfied expect new high/retest of the high).
2. TD Countdown
After a setup is finished the countdown can begin from bar 9 of the setup.
TD Countdown compares the current close with the low/high two bars earlier and you count 13 bars. Unlike the Setup, the Countdown doesn’t have to be a sequence of 13 consecutive price bars. If it is interrupted you just do not count the bars and when it resumes you continue counting further.
TD Buy Countdown starts after the finish of a buy setup. The close of bar 9 should be less than the low two bars earlier. If satisfied bar 9 of the setup becomes bar 1 of the countdown. If the condition is not met than bar 1 of the countdown is postponed until the conditions is satisfied and you continue to count until there are a total of thirteen closes, each one less than, or equal to, the low two bars earlier.
Countdown qualifier - The low of Countdown bar thirteen must be less than, or equal to, the close of Countdown bar eight.
Countdown cancellation:
- A sell Setup appears. The price has rallied in the opposite direction and the market dynamic has changed.
- close above the highest high for the current buy Setup (break of TDST for the current Setup)
- recycle occurs ( new Setup in the same direction and recycle activated )
TD Sell Countdown starts after the finish of a sell setup. The close of bar 9 should be greater than the high two bars earlier. If satisfied bar 9 of the setup becomes bar 1 of the countdown. If the condition is not met than bar 1 of the countdown is postponed until the conditions is satisfied and you continue to count until there are a total of thirteen closes, each one greater than, or equal to, the high two bars earlier.
Countdown qualifier - The high of Countdown bar thirteen must be greater than, or equal to, the close of Countdown bar eight.
Countdown cancellation:
- A buy Setup appears. The price has rallied in the opposite direction and the market dynamic has changed.
- close below the lowest low for the current sell Setup(break of TDST for the current Setup)
- recycle occurs (new Setup in the same direction and recycle activated)
Those are the basics!!!
Altcoin Setups
LINK/BTC
This was shared as a chart request on Thursday, where I said that it looked really interested. Price ended up bouncing EXACTLY off of the black support line and making a sizable move up. At this point, I am looking for a retest of the blue line to enter, although it may not happen. I do not see a clear entry at the present price.
Targets can be ascertained by drawing fibs.
The red line is another key level, so worth watching it we close above or below.
MATIC/BTC
I have posted this in the past few newsletters, so I hope you caught yesterday's move. Price held the ascending support and broke the local descending resistance (blue). It's retracing at the moment, but I am still hoping to see it hit the higher targets, shown by the fibs of the last move down. 180 is very local support (not shown).
WRX/BTC
WRX offered a great opportunity for many of you (I missed it even after sharing it!) and looks to be ready to rise again. Pretty clear setup here - a break of this descending black line (which it's working on now) should lead to a move to at least the recent high.
XTZ/BTC
Finally back above water on my entries around 260. This one has required a ton of patience - now that it is above the EQ of the channel (dashed line), I am looking for an initial target of the top of the channel. If that breaks, I will be looking to the top line and then price discovery of new all time highs.
Hopeful, but Bitcoin can ruin it at any moment.
US Government Loans
EIDL - ECONOMIC INJURY DISASTER LOAN
EIDL loans have been available to small businesses in the past for natural disasters. They have updated it to allow people hurt by the economic slowdown and COVID-19. What's special this time is that it's not actually a loan because YOU DO NOT NEED TO PAY IT BACK. Helicopter money. This application is directly from the government and takes about 5 minutes to complete. I have helped all of our workers and friends go through the process - it is very simply.
PAYROLL PROTECTION PROGRAM
This is the bigger loan program and the one that every business in America is likely applying for (whether they need it or not). This is meant to cover payroll expenses (75% of what you ask for), mortgage and rent and utilities (25%). Here is who is eligible.
The following entities affected by Coronavirus (COVID-19) may be eligible:
Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
500 employees, or
That meets the SBA industry size standard if more than 500
Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
Sole proprietors, independent contractors, and self-employed persons
Applying will be frustrating, but the downside is limited. You need a bank to process, so I suggest going to the bank you actually have an account with as they will be compelled to help you. Any other bank will likely rejected you, since they have no reason to help anyone.
Once again, the rich will get richer, because they will have good bank relationships and lawyers.
Binance Buys CoinMarketCap
As you likely know by now, Binance has purchased CoinMarketCap, reportedly (but not confirmed) for 400m dollars. I gave some thought as to why they would do this, and the obvious answer is traffic. Binance has effectively created a massive sales funnel into the exchange by acquiring the highest traffic site in the space. This seems like a very strong move by Binance, along with the multiple other acquisitions and new features. Binance appears poised to dominate the crypto space.
KuCoin On TradingView
I do not trade on KuCoin, but judging by the chart requests I get, many of you do. Good news for you - you can now view KuCoin chart on TradingView.
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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.