The Wolf Den #44 - Bitcoin's Big Move, My Bad Trades, Chart Requests
Bitcoin Thoughts And Analysis
I have had a few poorly executed trades in the past week. My oil trade is described below, but I also turned a winner into a loser when shorting Bitcoin this week. As you know from the last newsletter, I shorted Bitcoin on the breakdown from $7,000. Price went below $6,800 before making a move back up. I almost always put my stop loss in profit, but did not this time because I was still reasonably confident that price would drop. That did not happen. I actually added to my short a few dollars below my stop, because the risk/reward was good. I ended up stopping out of the entire position for a 1.25% loss of my trading portfolio. That's totally fine - I am just unhappy with the manner in which I managed the trade. In retrospect (hindsight is 20/20) I should have either a) taken profit at $6,800 and been less greedy or b) put my stop loss in profit.
That said, I am currently long from $7,108, based on a plan that I posted yesterday on Twitter. This trade was temporarily underwater as well.
While I realize that this chart looks crazy, it's an easy way to show my thinking - I am ready for any situation and have a plan for price action. I took my second short in the top red circle when price was rejected. That turned out to be a losing trade, but it was a tiny loss because of the close invalidation point, so it was not a "bad" trade. I had a plan and executed it.
When that zone flipped, I took the long trade in the top blue circle.
When I wrote the above, price had not yet taken off today!
How many times have we discussed the $7,777 level on the monthly chart? I think I have been posting it since I started the newsletter many months ago. Look where this move up by Bitcoin found resistance - exactly at that level.
Magic.
For real continuation, we want to see the monthly close above that line.
I have also been posting these blue supply and demand zones on the daily. I am still hoping to see this hit that top blue area, which would be a FULL RETRACE of the March 12th drop.
There we go. All of the pretty ranges are finally broken to the upside, as predicted. It is important that the blue range top holds - around $7,466. A test of that as support would be the next logical long entry if you are bullish. If this candle closes below that line, we would have a bearish SFP - a wick above the previous swing highs with a close below.
The little blue zone at the top is the next supply zone on the 4 hour chart, and a likely target if we continue up.
The hourly chart is REALLY cool. The black line represents the top of the blue zone that I just mentioned on the 4 hour. The hourly has already retested it as support TO THE PENNY.
Also, check out the red circle. This entire move started with a retest of that bear flag (which I played short and lost on) as support. Perfect TA here.
The Wolf Of All Streets Podcast Ft. Charlie Shrem
You can't tell the story of Bitcoin without telling the story of Charlie Shrem. Charlie, Bitcoin Legend, host of Untold Stories and CEO of CryptoIQ and I discuss life in the early days of Bitcoin and crypto, the insanity of life in prison and the lessons learned, the failure that is the United States criminal justice system, going from being a millionaire to working a minimum wage job and back to being a millionaire, being a target of hackers as a famous person in the space, the toxicity of the crypto community, the upcoming Bitcoin halvening and its implications and more.
Anatomy Of The Worst Break-Even Trade Ever
I have made it no secret that I traded oil horribly at the end of last week and into the epic oil fail on Monday. I am going to break it down for you, so that you can avoid my mistakes. I always review bad trades to see where I went wrong - and this is the worst one that I have made in a long time.
Remember, I define a bad trade as one where I did not execute my plan. It is not defined by the result.
My first mistake was buying USO at the end of the day on a Friday at $4.15, before the weekend. I did end the day in profit. Also, I have not touched oil in a long time, I was not really trading the fundamentals and was not aware that May contract expiry was coming on Monday. Charts are no way to trade oil!
Basically, I tried to catch a falling knife at the end of the week, only because price seemed "cheap." This is something I never do, and violates a number of my rules.
Futures dumped hard on Sunday. USO is not the same as USOIL, so it is not priced by the barrel. Also, it saw a significantly smaller decline than the notorious WTI contracts that went negative.
I somewhat blindly decided to double down on my position on Monday morning at $3.80. Now I had a slightly oversized position averaged in at $3.975, with higher risk than I intended and no immediate level identified for a stop. I still don't know what I was thinking!
Right after I did this, the price of oil started to drop... hard. Luckily, USO was actually rising for a few hours, because it's priced on futures and the ETF was weighting towards June and July expiries. It rose to the point where I was actually slightly in profit. At that moment, I honestly panic sold for a break-even. That turned out to be the "best" decision I made, because it dropped once again after and has fallen through the floor since.
Terrible trade - no real plan, doubled down lower, no intended point to exit, and little fundamental research of why price was doing what it was doing.
Not to mention I was short last month when USOIL was $25 and stopped out when it was $26 before it dropped to the floor.
I hope you can learn something from this - I RARELY make a series of stupid decisions like this, but it happens to all of us. Have a plan and stick to it.
26.4 Million Jobs Lost In The United States... In Weeks
The United States has erased all of the jobs gained since the "Great Recession" 11 years ago. Wow. 26.4 million Americans are out of work, with the number certain to continue growing. To put this in perspective, that's more than the total population of our top 10 largest cities:
New York (8.6m)
Los Angeles (4.1m)
Chicago (2.6m)
Houston (2.4m)
Phoenix (1.7m)
Philly (1.6m)
San Antonio (1.6m)
San Diego (1.5m)
Dallas (1.4m)
San Jose (1.0m)
I will not harp on the same idea that I have discussed countless times, but it always bears mentioning how absurd it is that Wall Street is being bailed out and the stock market is rising while Main Street suffers historic pain.
"Digital Dollar" Is Back On The Docket
The concept of a digital dollar that can be used to provide U.S. taxpayers with stimulus payments to weather the economic recession caused by the COVID-19 pandemic has once again been floated by lawmakers. This seems like such an obvious usage of digital currency - it's somewhat arcane to use the US mail and wire transfers. In my opinion, this would be massively bullish for the crypto space - not because the digital dollar would be a cryptocurrency, but because it would introduce the concept of a wallet and the process of sending and receiving digital money to the masses. That can only be good for Bitcoin and the crypto space.
Institutional Money Is Here
Grayscale's quarterly report was released this week, and the numbers are impressive. Quick summary:
- Inflows into its various cryptocurrency funds soared to an all-time high of $503.7 million.
-More than $1 billion was raised in last 12 months.
- 88% of investors were institutions
This puts to bed any argument that institutional money is not invested in crypto. Interestingly, the meteoric rise of investment continued through March 20th - a full week after the major crypto crash. This would indicate that institutions did not lose confidence in the space, even after that market shattering event. Also, Ethereum has flipped Bitcoin as the investment of choice. As you know, I remain more bullish on Ethereum than Bitcoin for the foreseeable future. Read the report for more information.
Letter From A New Jersey Doctor
This was sent to me by Michael Corrado, who I recently had on the podcast. His colleague wrote this email to his friends and family. It's a tough read, but shows the real situation on the front lines of the COVID-19 fight.
Hey everyone,
Several of you have checked in on me and have asked for another update. Here it is. Just to warn you, this update is completely unfiltered firsthand insight into the front lines. It might be a little hard to read…
The good news:
The total number of Atlantic Health System (Morristown is one of five hospitals under this health system) hospital patients with Covid 19 transitioned to recovery and discharged as of today, 4/21, is 1,380. Woohoooo!!! Total number of patients with Covid 19 discharged on any given day in Morristown is about twenty. Every time a patient is discharged, a clip from the song by the Beatles "Here Comes the Sun" is played in the entire hospital on the overhead system. This is meant to attempt to uplift and make the hospital staff smile a little.
The bad news:
Everyone is dying. Almost everyone getting put on ventilators is dying. The media is making it sound like we're over the hump. We might be, but the death toll is skyrocketing. My current main role and what I do all day is place central lines and arterial lines in the sickest patients who get placed on the ventilators. A central line is a twenty centimeter catheter that I sterilely place into the jugular vein in the neck of these patients which goes straight down into the heart; it allows the nurses to give very powerful, life-saving medications that are delivered straight into the heart. An arterial line is another catheter that again is placed sterilely in the radial artery in the wrist of these patients for accurate blood pressure measurements and to make sure the patients are getting enough oxygen in their blood. These are surgical procedures that only the chief surgical residents are performing, and it is a full time job. I worked fifty-two hours straight this weekend from Friday morning to Sunday late morning. Saturday morning, between 6am and 3pm, I placed nine central line/arterial line combinations on nine patients. One after another after another. One of those patients was my buddy and good friend, Charles, a tech at Morristown who I've known for five years. He contracted Covid six days ago, deteriorated, was placed on a ventilator, and went into kidney failure. Charles died Sunday night. He's not the only one I've known. A patient transporter died last week. One of our ER doctors died this weekend. Just found out another chief resident's grandma contracted Covid. She's 88, and just got put on hospice. She'll be dead in 48 hours. 40% (forty!) of the nurses at Overlook Medical Center, a hospital in Summit I work at sometimes, are Covid positive; some are at home with cough and fever, some are in the hospital on ventilators, and many have died. Bottom line is if you get put on a ventilator, it is very hard to get these patients to breathe on their own again, and if you're still on the ventilator after one or two weeks, you're probably going to die.
My day consists of coming to work, seeing my surgical patients, some Covid and some not, and getting them squared away by 8am so I can do central lines and arterial lines all day long. At the end of the day, before I go home, I go to my quiet office and call the families of the patients who have died that day, anywhere from two to nine patients depending on the day. I tell them their loved one fought hard and we did everything we could. I answer their questions. I do the best I can over the phone. There is no closure. The families don't get to be with their loved ones before they die. They don't get to hug them or hold their hands. They die alone in their hospital room, on the ventilator, gasping for air that isn't there. It's horrible and depressing and has happened to regular people like us who are just trying to stay healthy.
On a separate note, I am physically healthy and doing my absolute best to stay that way, so don't worry. This message is not about me. This message is just to give you a little window into the life of a healthcare worker and what we are all going through. You may read this and think, "what can I do to help?" The best thing you can do is protect yourself and protect your families. Keep doing what you've been doing and avoid the temptation to let up because it's not safe. We are not out of the woods. Keep on being safe and staying home. Keep yelling at your parents when they try to break free and leave the house. If you have friends or know people that are going out, be a good friend and reason with them. Show them this post if you have to. Whatever it takes. Love you all. Stay safe. I'm always here for you. Always.
Schwab's Market Perspective
Recent stock action suggests some investor exuberance is being worked off.
This is a good, no nonsense and empirical view of what is happening with the economy. There's no need for me to summarize - you should give it a quick read and see what one of the largest firms has to say about the market and economy at present.
Chart Requests
AMD (ADVANCED MICRO DEVICES)
This looks good from a technical perspective. This is clearly in a sustained uptrend in general. Along with the rest of the market, price saw a drop but has reversed since. Price bottomed right at the 200 MA (red) and a key level of support, $37.18. It formed an inverse head and shoulders, which signaled a reversal of the local downtrend. Price broke the red neckline and retested it as support. Really pretty TA. That red line was also in confluence with the 50 MA.
At this point, I would like to see a break and retest of the all time high, the top black line. Price is consolidating below that at the moment. There's a chance we could see rejection and a drop from here. People would scream "double top" here, but that's not even a though unless the swing low between the two highs is breached, which is a distant possibility for now.
BAND/BTC
This looks bullish. Really bullish. Price topped out around the all time high and is consolidating below resistance in a perfect bull flag. I would personally looked for an entry either at the 8292 support (which would also be the bottom of the flag) or on a breakout of the flag. Safest entry is a break of the top white line and a retest as support, if it happens. I am adding this to my personal watch list and will look to trade it.
BCH/BTC
BCH is at an interesting spot vs. Bitcoin, testing support on this large Bitcoin move up. The key areas are marked in blue. I don't see a reason to trade this unless it breaks the descending resistance and clearly flips this area to support.
COTI/BTC
Boring chart at the moment and has been for a while. Price is in a symmetrical triangle (blue) so a break above or below would give some sense of direction. It's really just ranging between 269 and 309 or so. Easy to trade the range, but a break above the top area would start the true bullishness. For now this is sideways, with some opportunity. Price is being supported by VPVR volume, so it's clear skies above if the buying gets going.
ENJ/BTC
ENJ has been bullish for a while and nothing has changed in that regard. A beautiful breakout a few days ago, through the black descending resistance that has been holding price down for a while. RSI is overbought, I would expect to see some retracement here. There's also a bearish SFP, that slight wick above the previous swing high. So that would indicate we should see some retracement or consolidation as well. A retest of the descending black line could be a nice entry if this remains bullish.
FTT/USDT
It doesn't get any more simple than this chart. $2.81 is really the only line that matters for the moment. A daily close above it would be bullish - so a retest as support could be a nice entry. If it is rejected, a bounce off of ascending support would be nice. Either way, it's a bullish chart.
GOLD (BARRICK GOLD)
Full moon. Hard to even chart this here, but looking at the weekly you can see that price is coming into a key supply zone. Regardless, this is rising every week on strong volume - no reason to fade this movement if you are already in. Hard to buy at current price, but this looks ridiculously bullish.
JMIA
Keep it simple. This jumped right out at me when I checked this chart. Really nice breakout from the down trend. Price is moving nicely away from the red line and has broken through the R1 pivot. It could retrace some, but the target of this move should technically be the R2 first, which is in confluence with a key level of support and resistance. After that, the target would be the top of the red line.
MA (MASTERCARD)
Mastercard looks like the rest of the market - irrationally bullish. That said, the descending blue line is the key resistance for now - to break this downtrend would require a break of that. You can also see the horizontal blue box - you want to see price clearly above that area. the 50 MA crossed bearishly (death cross) through the 200 MA, but that's often a lagging indicator, a result of what happened and not what will happen. Still worth watching.
OXT/USD
This is a game of which line breaks first - the ascending one or the descending one. Those are your indicators for a trade here. Price is currently being stifled by the daily 50 EMA. Key levels are shown. I would be really watching for a break of that descending blue line to get excited. If you are already in, it looks good and there's no reason to exit.
PDD (PINDUODUO)
Parabolic and in all time high discovery. Nearly impossible to chart here. It does look a bit topped out, with a shooting star candle yesterday and a large red candle developing today. That's a classic bearish reversal pattern. Wait until daily close to confirm. If you are looking for an entry, I would hope to catch a pull back to the previous all time high at $45.25.
RHHBY (ROCHE HOLDING)
No need to look at a chart or really draw lines, This is testing the all time high, the only line that matters at the moment. A move above would be bullish, a clear rejection would be bearish - although it could just lead to consolidation. If you are already in this, it looks great. If you are looking for an entry, you want to see a clear break of this resistance and hope to catch a retest as support.
VET
This chart has not changed in months, honestly. It's at a key level here, testing the ascending support. You could view this as an entry point if you are bullish, but a break below would be a bit more bearish. In general, I remain optimistic above 50 sats.
XAU (GOLDMONEY INC. ON TSX)
This looks good. $2.65 is a key support level now, and price has clearly broken from a bull pennant and retested it as support. The flagpole is shown, with the target extrapolated from the breakout. That target is in confluence with a key line (top black line). First target here is the R1 pivot.
XZC/USDT
Not much price history here, so going on the little we have. Looks bullish. This has clearly held the key ascending support and is working on a breakout through descending resistance. $4.015 is the only key level so far on the chart, and price is trading above it.
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.