The Wolf Den #51 - Stocks Rolling Over, Alt Charts, Requests And More
Bitcoin
Bitcoin went up. The bullish divergence with RSI that I posted on Tuesday on the 6 hour (which was confirmed before on the 4 hour) was the bottom signal. Cool.
50 MA on the weekly is beautiful. We were watching it to hold as support, and it has done a wonderful job thus far. Price is currently working on another test of weekly supply, the zone drawn up top. It held the pink support like a champ. This looks great. The more that zone is attacked, the less likely it is to hold. But we do need to see price trading in and above it soon, as opposed to being rejected again.
Just an update to the daily. Same 3 lines, and price is currently above 2 of them. Purple is THE LINE to end the bear case - a new higher high.
Last we spoke, price was ranging in the bottom blue local range. I said that a break in either direction would tell us where price was likely headed. It broke up. It then flipped the EQ (equilibrium, middle dashed line) of the larger channel to support. As I said, this would mean a likely trip to the top of the range, where price is currently trading.
This is JUST AN IDEA. Watching to see if price will form a bull flag or consolidate here for another push up. There's already hidden bullish divergence on the hourly (not shown) which is a continuation signal.
I also mentioned this on Twitter. There was massive sentiment that $9400 would be the top. When everyone expects something, it rarely happens. It played out as I was thinking it would. I don't see any reason to be bearish for now, but still want to see a higher high around $10,500 to put this argument to bed.
Bottom line - this is still dip buying season.
CME Gap
The sizable Bitcoin dump over the weekend had traders calling for 1K and 2K targets again. However, those who believe in the filling of CME gaps noted that the move, since it happened while futures were not trading, would leave a massive gap in the CME future chart.
People have different definitions of a "gap fill." Some include wicks, some do not - that goes for both the gap itself and the candle that fills it. If you are a wick person, then the gap has been filled on this move up.
There is STILL A GAP IN THE 11,000s!
Wolf Of All Streets Podcast - Nathaniel Whittemore
Nathaniel Whittemore is the host of The Breakdown podcast. He and I discuss traveling and working in conflict zones around the world and lessons learned, the idea of American Exceptionalism and its effects on other cultures, hyperinflation in Lebanon and its effect on Bitcoin, the incredible strength of the dollar, Warren Buffett's take on the markets, the path to hyperbitcoinization, working at home through the global pandemic, creating content on a large scale, money printing and UBI and much more.
Miners Closing Shop
No big news here, but worth sharing nonetheless. As predicted, the Bitcoin halving has caused a number of miners to shut down their gear, as business has become unprofitable. This is a natural result of difficulty doubling and rewards being cut in half. A culling of sorts was expected, favoring newer ASICS and forcing miners with older gear to pack it in until price is higher. It will be interesting to track the effects of the halving on the mining industry, and to see if these machines are ever turned back on.
The Market Trades 24/7, But You Shouldn't
The market is open 24/7, giving traders the feeling that they always have to be trading. We all know that this is impossible - but many try anyway, setting alarms to go off while they are sleeping, having their laptop right by the bed and bringing their phone into the shower to make sure they don't miss the next big move. This causes tremendous fatigue and FOMO (fear of missing out) for emotional traders. Nobody can effectively track a market that is perpetually available, and new traders find it difficult to step away. This often ruins both their personal lives and destroys their finances.
Set specific trading hours. Don't set alarms loud enough to wake you up. Keep a normal schedule and a normal life and fit your trading into that framework. Otherwise, you will burn out or start to make impulsive, emotional decisions. Treat trading like a job - and one that you want to keep for a very long time.
Why Exposure To Bitcoin Reduces Overall Portfolio Risk
This is another gem from a previous newsletter - Issue 2.
This is a spectacular statement from Venture Coinist and Ari Paul on why every portfolio manager and institution should have exposure, even if only minimal, to Bitcoin and cryptocurrency. The basic idea is that risk managers generally look to diversify their portfolios and seek the rare opportunity to expose themselves to assets with more idiosyncratic risk than systematic risk. Systematic risk describes an asset that largely moves with the global economy or market as a whole. Bitcoin and crypto are largely uncorrelated to other markets. So investing in Bitcoin with a small portion of the portfolio offers idiosyncratic risk, which Ari Paul describes in the video as the “Holy Grail of investing.” Watch the video!
Legacy Markets
The market looks ready to roll over and head back down. The past 2 days have looked awful, with bearish followup thus far today.
I am still in all of my shorts.
BRK.B - $196.9. Current price - $168.
TSLA - $800. Current price - $777.
BA (Boeing) - $134. Current price - $116.
SPY - $288.62 average entry. Current price - $277.
BA (BOEING)
I have been sharing this idea for weeks. My trade was a bit underwater for a few days, but now it's headed down. Clear break of a bear pennant. It's breaking a key support now as well at $120.38. That's another short opportunity, potentially.
BRK.B (BERKSHIRE HATHAWAY)
What can I say? Perfect entry a few weeks ago, almost to the penny. Conviction to hold it. Buffett is in cash, there's no reason to think this rises again until he starts buying, in my opinion.
SPY
Price opened the day below the neckline of the potential double top. Confirmation would come with a candle close below. The target is shown. I think it will go further than that, but I am very bearish in general. Trade the chart.
XAU (GOLD)
I have posted the large time frame chart many times. As I tweeted yesterday, I entered a shorter term gold long on a bounce from the bottom of that supply zone. Clear bull pennant. Beautiful move above today. This looks amazing.
Altcoins
Altcoins continue to take a beating from Bitcoin. The trades that I posted on Tuesday worked out VERY well, but as seems to be the trend of late, the windows to trade altcoins are not open for very long. You can go back and click on any of those Tuesday charts, hit the play button and see how they progressed. Let's review a few and see if there's anything interesting to watch.
BAND/BTC
If you recall, this was one of the few "buy it now" trades that I have ever posted, right on the first retest of the descending line as support. Bitcoin's moved have caused it to retrace full now, but there was potential for a 14% profit on this trade idea. It's a tough read now, depends on Bitcoin. But after breaking resistance like that, it should eventually continue moving up towards the top of that descending line.
CELR/BTC
This looks great and is the only alt trade I am currently in. Price is working on breaking through the descending resistance. More importantly, notice that today's volume is already double yesterday's - in half the time. What you really want to see on a breakout is an increase in volume, and this fits the bill. I have a heavier than normal position on this.
DOGE/BTC
DOGE is currently testing ascending support. I have orders here, but they have not yet filled. I am always interested in this coin, but view it as a very long term play. It can take months to finally cycle up, but it always has in the past. The safest entry would still be a break of the descending line, as entering here could still see price fall to the bottom of that range.
ETH/BTC
ETH took a beating, like every other large cap, when Bitcoin started to move. At this point, I think that .02 is really the line in the sand. I am very interested in buying in that area, in confluence with the rectangle drawn across the chart. Last time I wanted orders there I was front run, so I will likely start buying a bit above if we get there. A break of the descending black line would be even better.
FTM/BTC
I posted this on Tuesday when price was at 47 sats, after entering at 43 sats on the breakout. This rose 22%, to 57 sats, after flipping 47 as we were watching for. The target was 53 sats, which is where I exited the bulk of the position. Price is currently testing that area as support, which is the top of the trading range that price has been in for quite a while. This "could" be a good entry if alts behave. Below is a zoomed out chart, so you can see the range in its entirety.
LTC/BTC
This looks dead. But as they say in Game Of Thrones, "what is dead may never die."
I am not one for catching knives in general, and would not take a position here with someone else's money. The safest entry is once price is back above 5110 as support. THAT SAID, there is a POTENTIAL (not confirmed AT ALL) bullish divergence with RSI on the daily chart in oversold territory. If we see a definitive elbow up in RSI at a daily close, I think we will have seen a likely bottom or be very close - so this could be a monster trade if we catch it. Again, it looks awful right now, so I would not consider it yet.
LINK/BTC
I remain bearish on LINK. The path drawn is what I am looking for - I am interested in buying again in the lowest demand structure, around .00033. As you can see, the more immediate demand (red) has already been breached previously (I put a rectangle to show), so I do not expect it to hold if price continues down. The idea of a demand zone is that there are orders leftover sitting there. Those have obviously been clear. This has played out like clock work, with demand zones flipping to resistance. On the USD pair, I am still expecting an eventual drop to around $2.50 and remain short.
MATIC/BTC
This thing is awesome. I posted it at 181, but said that I would not enter until a break of the descending black line, which I did at 189. They announced their mainnet was finally going live, which was the catalyst - but as you can see, it was all there in the chart. This went up 20% from the 189 entry and is currently flipping the 210 resistance to support. That's another potential entry if you missed it - just be careful, we know this thing can move quickly in EITHER direction.
Chart Requests
AMZN (AMAZON)
Mixed signals here. On first glance, this could be bullish consolidation, but it looks a bit like a diamond top to me. It is still holding above the ascending channel, which is bullish. And fundamentally, this stock has the best chance of continuing up even if the market turns bad. That said, it could fall with everything else, so a clear break would have me targeting those horizontal levels shown. I could see an argument for shorting this soon, but it's risky to bet against Amazon in general. I am more of a dip buyer.
BOLT/BTC
No need to complicate things with this chart. Price has done nothing but dump and has found itself in a trading range that started at the all time low. Price is still trading in the bottom half of the trading range after being rejected at the EQ (equilibrium, dashed center line). Anything below that remains bearish. Flipping that level to support should eventually target the range top. An exit from the top of the range would indicate a real reversal. A retest of the range bottom could be a decent entry with a tight stop - you don't want to be following this down into price discovery.
CKB/BTC
Not interested at all. Not even a little. This is in all time low discovery without a hint of a bounce. You can see the key levels. Breaking the blue line would be the first step, then flipping black to support. The real trend break would be the upper descending blue line.
CORT (CORCEPT THERAPEUTICS)
This is a nice looking chart. I checked the weekly for a broad view. Price is trading above both the 200 and 50 MA. There was a brief death cross, but it looks likely to have a golden cross back up coming soon. The death cross has probably played out on the recent drop with the market.
The overall pattern is a massive descending broadening wedge. This is statistically one of the most reliable chart patterns. A break of the top descending line would target the high from the beginning of that line. Price has also broken the immediate consolidation (black descending line). Looks good.
DAG/BTC
This chart is stupid. Every time I look at it I shake my head. Look at those wicks! It is hard to analyze appropriately when it has been such a pump and dump. That said, it appears a fresh uptrend has started, as shown by the black channel. You really want to see 1875 broken and flipped to support for this to be truly bullish. Price is trading above both EMAs on this time frame, so there's cause for optimism. As long as that ascending channel holds, this should continue up. Note, that means it could visit the bottom of the channel.
ENJ/BTC
This continues to move nicely. It is currently at a key level, shown by the rectangle. Bulls want to see that hold as support. Price tapped the 21 EMA today and bounced, which is a good sign. It also retested the descending black line that was support and signaled an exit from bullish consolidation. Everything above that horizontal zone remains bullish.
NEO/BTC
This had a really nice bullish SFP a few days ago, as shown by the red arrow. Price wicked below the previous low, found liquidity and skyrocketed up. It was then rejected with wicks above and closes below on multiple candles at a key resistance. Really predictable and cool price action. At this point, I want to see a close above 1155 to think about it, since the real move was the SFP.
TFUEL/BTC
Price made an all time low at 20 and has revisited it a few times. That's a bit scary if you are bullish on this pair. Trading above 25 would be much better. A break of the descending wedge would be bullish, as it would signal an end of this downtrend. That's what I would personally be watching for.
VET/USDT
Nothing to report. Nothing has changed since last week. It is still struggling at the same resistance. I wish I could tell you more, but there's nothing to see here for the moment.
VTIQ (VECTOIQ)
This is parabolic, but looks like that trend is likely finished. When something ceases to be parabolic, am 80% retrace is not unheard of. We saw it with Virgin Galactic, Tesla and obviously Bitcoin in 2018. I would not touch this thing, not enough history. For now, I think we can see it has likely topped out. It retraced to the 38.2% fib in just one day! If I was trading this, I would be short. But if I was looking for a long, I would be placing orders around $15, just in case it really dumps after that parabolic move.
Hard to trade this with any confidence - pure FOMO.
XLM/BTC
This is actually in a really interesting spot. Price is currently sitting, once again, in the golden pocket - between the 61.8% and 65% retracement levels. This is in confluence with the daily cloud top, which is flat and should offer strong support. This is a bit of a knife catch, but I could definitely see buying around here. That said, it lost the kijun (thin brown line) as support today before dumping, so more confidence back above that. If it loses the cloud top, the cloud bottom is the next area of support.
XMR/BTC
Nice example of a bearish SFP in February, shown by the red line. Price wicked above the previous swing high and range high and dumped hard. Liquidity found for selling.
Nothing interesting here at the moment. It's trading in a range around the all time low on Binance. Not great. It's in the bottom half. Not great. I wouldn't trade this until the descending line is broken, or at least it flips the EQ (middle of the range) to support. Or you can try to catch a knife at the range bottom if it gets there. At the moment it's in no man's land.
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.