The Wolf Den #42 - Charts, Trades, Contact Tracing, Podcast and More
Bitcoin Thoughts And Analysis
I added to my Bitcoin longs yesterday when price dipped back to the $6500s. Everyone seemed to want to go short there, but I was feeling quite confident that it was a shakeout and bear trap.
First, two days ago the bearish count on TD Sequential on the daily chart was invalidated when it printed a new green 1. That was my first signal that the downside could be coming to an end.
More importantly (for me), I noticed another bull div forming on the 4 hour chart, shown in blue. This is a huge bottoming signal for me, and was enough for me to add heavily to my position. That said, there is potential hidden bearish divergence forming, so we need to see some follow through now. If that confirms, I will close my positions, as it signals that the bull div has played out completely. You can see how they have gone back and forth. Confirmation would come in the form of a clear "elbow down" in RSI at the next candle close. If price can rise another $100 or so, this is likely to be invalidated.
Remember this cool chart from Tuesday? Price is now trading back above the red range, which I view as bullish. I would like to see that range top hold as support on 4-hour candle closes.
We also have a clear bull flag breakout to the upside on the 4-hour chart. Things still look good to me, overall. Just watch that potential hidden bear div!
The Wolf Of All Streets Podcast Ft. Eric Feigl-Ding
Eric Feigl-Ding is the leading voice in the United States on the COVID-19 epidemic and was the first epidemiologist to publicly sound the alarm on the dangers of the virus. He was painted as an alarmist but was ultimately proven right. In this episode, we discuss the early warning signs of the pandemic, why COVID-19 is the "perfect storm," how testing is the biggest problem, including 50% false negatives, the importance of contact tracing, the possibility of reinfection, how the porn industry could accidentally be showing the way on testing, the difficulties of shutting down the United States, the complicity of the US government in the epidemic and more.
This is the ENTIRE story on COVID-19.
Altcoins
The trades that I have posted in the past newsletters are all largely still valid. I am not going to go into great detail, but here are the ones I am still watching. You can revisit the old newsletters anytime for more information.
BAT/BTC
Still looks the same! Clear break of descending resistance and clear move back into the trading range. Still expecting a move up.
ETC/BTC
Same, still in this. Clear breakout from the blue channel, still consolidating around support.
FTM/BTC
Still hanging around above support, still has broken out of the descending trend. Looks good above 41, just needs some volume.
ICX/BTC
Weak breakout, but still basically at the same level and holding support. Should still eventually make a move up.
MATIC/BTC
Still love this above that ascending support. It's been a good trade literally every time. I am sitting in this still dead even. A break above pink would be even more bullish, but buying support has been profitable over and over again.
NAV/BTC
Boring but fine. Looks exactly the same as it did when I posted it many days ago. The uptrend through resistance is intact, I still want some clean price action above 1262.
RVN/BTC
This has dropped a couple sats since Tuesday, but the premise remains the same.
WRX/BTC
This continues to look great and has broken the local blue channel I posted.
XTZ/BTC
I love this trade, it has been amazing. Now price is consolidating HARD against resistance - I expect a strong break up in the very near future, but would not trade it again until it is confirmed.
Wyoming Remains Ahead Of The Curve
I believe Wyoming was one of the first (if not the first) state to allow people to pay taxes in Bitcoin. They continue to be ahead of the curve, now allowing insurance companies to invest in Bitcoin and other digital assets. Big news. Now if only we could get the federal government to follow suit....
Contact Tracing And Privacy
The two companies are building the only realistic way to get out of this shutdown.
Contact tracing is the talk of the town at the moment. If you are not familiar with the idea, it's tracking down every person that someone who tests positive for a disease has come into contact with while they were contagious. A mammoth undertaking. You can listen to the podcast today with Eric Feigl-Ding, or the coming episode on Tuesday with Ed Felten for more information.
At a basic level, contract tracing has always been done manually. In Wuhan, there were 10K people performing this task in teams of 4.
Google and Apple, bitter rivals, have come together to make this a digital reality in the United States. Effectively, phones will ping one another via bluetooth when the contact tracing app is open. If someone finds out they are sick, the other person will be notified that they were in close proximity with the sick person at some point in the recent past. That's the general idea. Many are worried that this will violate their privacy - that is not a huge concern, according to the article above. Give it a read and see what you think.
The Housing Market
Something that I have been thinking about (I have my real estate license and actually worked as a realtor).
A few likely upcoming issues with the housing market.
People are not paying rent and mortgages. Banks depend on these payments to remain liquid. Soon, banks will no longer have the liquidity that everyone is praising them for.
Then Real Estate goes full 2008.
And how can someone buy a house now? If you are unemployed or furloughed, then you cannot send the requisite recent paychecks required to qualify you as a viable buyer. Even if you have the money, you are unlikely to qualify for a loan based on the current system.
To properly value a home requires comparable sales (comps) in the neighborhood. With nobody able to sell their home, it's nearly impossible to properly assess value. How will an appraiser or bank determine the loan to value ratio when considering these issues?
Bottom line - real estate is probably completely screwed and will be a huge factor in the likely next leg down for the economy.
Chart Requests
AGI/BTC
I am not a fan of trying to buy the bottom when price is in all time low discovery. That said, price has broken the descending red line, so the down trend could be over. I would like for a flip of 177 from resistance to support as a first sign of reversal and a likely entry. I have drawn it out with the entry I would personally take in the circle. When I draw something like this, I don't expect it to follow the time frame I draw it on - just the general idea.
ALGO/BTC
This has potential. Holding 2517 is a good start, although I would personally like to see the descending line broken before considering an entry. All depends on your risk tolerance, but this could become a great trade if alts rise.
AMZN (AMAZON)
Anything above this channel is bullish. Honestly, the chart is useless. I have been buying this blind for years, every month. This is the best company in the world, especially during a pandemic. I have no idea where this is going now, but I am not selling.
AXU.TO
Basically trading in a large range since 2016, with some deviations below and a brief move above. The red descending line would be the downtrend break in my eyes. For now, price is trapped between the 50 and 200 MAs on the weekly chart - and was rejected fiercely from the former. Price was also rejected at the center of the range. I can't see a reason I would personally trade this here. Down below, sure, it was a buy - perfect bounce from the red demand zone. Also, there was major volume on the drop which has decreased on the way up.
BNB/BTC
BNB continues to look bullish. As mentioned in previous issues, it broke the descending black wedge, held black horizontal support and has now broke out of the symmetrical blue triangle to the upside. Look for it to hold ascending blue support - a break down of that could signal further movement down. The light blue box above should be significant resistance. A bounce off of that ascending support again could be a decent entry with a stop a few percent below the line.
BP (BRITISH PETROLEUM)
Oil and gas are avoidable until OPEC gets their stuff together. This chart is ugly - clear break down below support at $26.75, with a retest as resistance and a retrace of the move down back up 50% before a drop. All classic TA and totally expected. This chart says more downside - but it's all up to OPEC and can change quickly.
ETH/BTC
I have shared this a number of times, including Tuesday when I showed the bull flag, target and imminent break out. Well, there you have it. Chart is the same, nice clean breakout on solid volume. Still hoping to hit the pink line.
ETH/USD
Same chart, different day. The weekly on the right is doing exactly what we expected after holding support. The daily on the left had the beautiful retest of the old downtrend as support and has moved up. It recently consolidated into a little bull flag, and is breaking out today. I remain more bullish on ETH than BTC, as I said.
ETHBEARUSDT
If you read the above updates on ETH/BTC and ETH/USD, you will likely know what direction I am headed in for this chart. Price dropped and formed a range (blue). It made a nice move from the bottom to the top after holding the EQ (center dashed line, equilibrium) as support. The clear short sign here was the wick above the previous swing high, known as a bearish SFP. That was a clear rejected and sign that a move to the bottom of the range was likely. Not only did that happens, but it is presently retesting the range bottom as resistance. If that resistance holds, more downside is likely.
GDXJ (VANECK VECTORS/JR GOLD MINERS ETF)
Really nice move since last week - hit the target ($35.98) and went over 10% past. Now I would like to see if the $35.98 area can hold as support.
What I do not like is the dramatically decreasing volume on the entire move up. Really clear, and is similar with most charts I have looked at on stocks and other legacy assets. There's also a bearish SFP above a previous swing high.
If you are bullish on gold, I can see riding a position here, but from a technical perspective the move up is a bit suspect.
GOOG (GOOGLE)
Almost every equity chart looks like this. Massive drop, impulsive bounce to retrace 50%, as expected. Google is at key resistance as well, the red zone that I have drawn which has been the most important level on the chart for the past year or more. At this point, you want to see that red area as support. I could not imagine buying this here, it's at resistance after a massive move up on decreasing volume. If I had bought below, as a TRADER I would consider selling here - but that could also end up leading to buying higher if it does break through as an investor. Really a tough spot to make any decisions.
HEXO
Awful looking chart. Not much price history, but price clearly broke down a key level at $1.10 after a small bull trap of price action above. You can see the clean rejection in the green circle. I would not consider this below that line, as this is arguably all time low price discovery. You can hang your hat a bit on this weird descending broadening wedge in blue, which is being tested on the bottom as support, but I wouldn't count on much upward movement. It can ride that line down to 0.
KAVA/BTC
This could very well be forming a bottom here. It's in an ascending channel from the bottom for now, testing a key level as I type at 7451. If I was in this, I would look for the channel to hold and keep price moving through the descending blue line. that's where I would personally be interested, as the break of the downtrend would be confirmed.
LINK/BTC
I am still short LINK, as you probably know. There was a big bearish divergence with RSI and then price broke down from the clear ascending wedge. That said, it's been holding it's own and could be breaking the local downtrend now (blue line). I will be keeping a close eye on this - LINK never seems to drop for long!
LOOM/BTC
LOOM is testing a key resistance now, the descending blue line that would signal a likely break of the down trend. There's also a ton of volume resistance above on VPVR, with the POC (blue line, point of control) also just over head. A break above these lines and retest as support would be a bullish signal. The red zone below is demand, and has been tested once already. If price is rejected here at all of this resistance, that area could be a nice buy.
LTO/BTC
Very little price history. It's broken the downtrend from when it hit the exchange, and is following support up. I would like to see a break above the black line and retest as support.
NFLX (NETFLIX)
This is one of my largest holdings - I am up well over 400% on my position. I have posted this chart so many times you are all probably annoyed. Patience pays. Hard to know where this is going now, I am just going to enjoy the ride.
PAYC (PAYCOM SOFTWARE)
This didn't even make it back to 50% as of yet, like most other equities. It's finding strong resistance at the 38.2% Fibonacci level. Further, there's an impending death cross between the 50 and 200 MA just above the price - often a lagging indicator, but when it's close to price like this it can be strong resistance. The descending blue line is the fresh down trend. Not much to like here for the moment unless it starts flipping levels to support.
QNT/BTC
Besides volume (of which there has been little) this is a very sexy chart. Clear break from the blue wedge and sizable move up, followed by bullish consolidation in the form of a red flag. A break of this flag's target is shown based on the length of the flag pole.
TTWO (TAKE TWO INTERACTIVE SOFTWARE)
This is one of the few charts that I have seen that actually looked like a "V Shaped Reversal." Price is trading above both the daily 50 and 200 MAs and is currently holding the 200 as support. That's bullish. This move does look a bit exhausted, so hard to know what will happen. Personally, if I was keen to get in this I would look for a bounce off of the 200 or the black line below, or a break above the black line over head and retest as support. But this looks pretty good.
UCO (PROSHARES TRUST CRUDE OIL)
I honestly have no idea how to chart this, even on the monthly. This is one of the most rekt charts that I have ever seen. The only saving grace could be this potential inverted hammer at the bottom, which could signal a reversal. Would need to wait a month for the next candle to confirm. This looks dead, but dead things often bounce! Just need some good news for oil.
ZNGA (ZYNGA)
No idea what this is, but it's been raging in a bull trend for quite a while. This ascending channel can be drawn many ways - I like it here in red, but it does not really have the touches on top to be technically valid. I just like how the center line falls. I think this is coming into a lot of potential resistance ahead, and there is very clear bearish divergence with RSI on many time frames, including the weekly. This looks a bit exhausted, but hard to fade such an intense rally.
Phemex
This newsletter is sponsored by Phemex, the only leverage exchange where I now trade.
Here are a few important points:
Institutional Background of the team - led by over 8 former Morgan Stanley Executives
6 Crypto trading pair + GOLD/USD
Phemex’s design criteria (<1ms latency speed, >300k tps, >99.9999% availability)
Sub-Accounts (Different from BitMEX and Bybit, allow to hold long and short positions at the same time, or lend accounts to fund managers)
USD settled contracts, less risky and simple PnL (Different from BitMEX and Bybit)
Proprietary Cold Wallet System
3 Withdrawals per day (Different from BitMEX)
Traditional financial products soon, after licensing from MAS
Chainlink, Tezos and Litecoin trading now live. New pairs coming soon
Fund managing options (Up to 200 Sub-accounts, simplified withdrawals, full API integration)
SIGN UP HERE AND GET FREE BTC!
Voyager
Voyager is my favorite crypto broker. You can trade crypto fast and commission-free. Earn up to 6% interest on top coins with no lockups and no limits. You literally earn interest on your holdings while you trade at a rate higher than you can get in any legacy bank account or fund.
This is where I personally invest in Bitcoin on a daily basis. They are a publicly traded company on the Canadian Stock exchange - I trust them implicitly to protect my funds.
Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account.
https://www.investvoyager.com/
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.