The Wolf Den #60 - Trades, Chart Requests, A Ton Of Tips And More
Bitcoin
I am still long Bitcoin from $9,300, as shared on Tuesday. Nothing has really changed at all on high time frames. Not much has even changed on low time frames!
Sloppy chart, I am sorry, but the price action is strange. People are calling for a head and shoulders, which I do not really see or think would be valid. Just mentioning that the idea is out there. I see an ascending broadening wedge after a drop, which is technically bearish but is a very weak pattern, statistically. I think this can at least hit the 50% or 61.8% retracement before making a decision, so there's still a bit more room in this trade in my opinion. Further, the 50 MA is holding like a champ and is supporting price on the way up for the moment.
I have a sneaking suspicion (just a feeling, don't trade on it) that we will see another BART pattern back up, just to really mess with retail.
If this was a head and shoulders, the honest way to draw the neckline would be blue line. That said, for it to break down would require a break below that. Since it is descending, hard to imagine worrying much about that for now.
As I mentioned Tuesday when I took my trade, the pink line was a clear area of support from the consolidation on the left of the chart. The wick through and close above showed that there was a lot of liquidity and buying interest in that area. Perfect spot to push price down to on that big drop if someone was trying to fill bids and get long. In the short term, that black line needs to be flipped to support. Price is struggling there.
The short of it is that I would exit a long and consider a short if the ascending black support in the first chart is broken. Until then, I remain long.
Best 50 Days In Stock Market History
This has been the greatest 50-day rally in the history of the S&P - and almost every trader, hedge fund manager and average Joe has either missed it or lost money attempting to trading it. As you know, I effectively shorted the market down, but have been reluctant to buy back in for a variety of reasons as a trader (investment strategy did not change and I benefited greatly). So yes, I "missed it" as a trader.
This amazing rally has happened while unemployment has also "rallied" to historic levels, GDP has contracted more than ever before and every economic indicator screams "Great Depression."
I know I continue to harp on the same point, but the stock market is not the economy. This is absolutely irrational - even companies that have performed poorly and have little hope for the future have risen tremendously for no fundamental reason - a rising tide lifts all boats.
Is it a surprise that people are angry?
SIDE NOTE, I SHORTED THE SPY TODAY FOR THE FIRST TIME IN WEEKS. THIS IS A TRADING MOVE, BUT THE CHART IS BELOW IN THE REQUESTS.
Control Your Emotions
“If you can learn to create a state of mind that is not affected by the market’s behavior, the struggle will cease to exist.”
– Mark Douglas
That's it. That's the post. Just a really smart quote that touches on an essential aspect of trading. Keep your emotions in check and only trade when you are in the proper mindset. It sounds easy, right? We all know it it's not!
A Few Trading Tips
Set stop losses using USDT or USD instead of BTC. I rarely do this, but it is a technique that many utilize if they are concerned about a BTC drop. If your stop is in BTC, then when your stop triggers, you effectively sell your alt to buy BTC when it is dropping. If your stop is in USDT then you do not lose on BTC dropping as well.
Trade low sat coins in the USD or ETH pair. It's almost impossible to fill orders on a coin like HOT without getting in line and waiting forever. You can trade the USDT or ETH pair to get "in between" the order book and fill without paying a 20-25% premium to market buy into the book.
When trading low sats, set stops that trigger lower than your stop price. For example, If you wanted to set a stop loss for STORM at 20 sats at support, set the order to trigger at 19 and sell at 20. This way you get the benefit of 1 more sat before you trigger, but are immediately first in line to sell a sat higher if it hits your stop. It's a bit risky if it truly dumps, but low sats rarely jump more than 1 sat at a time. This way you don't get wicked out when price hits 20 for a second, rather than going below.
ALWAYS scale out of positions. I draw a number of targets on the chart, and set my sell orders right when I enter at each of these targets. Depending on the chart, I sell between 20-25% at each target. I NEVER catch the huge pumps with a full position, but always try to keep 15-25% of my bag in case the coin goes absolutely crazy. You will reduce stress tremendously if you just take profits on the way instead of trying to time the market for your sell order. You can always buy back in when another key level is flipped from resistance back to support. I did this a few times recently with ZIL.
Use http://thepatternsite.com/! I can't believe I have never mentioned this, but this is where you can see the statistical probabilities of different patterns and techniques from Bukowski. Study it and get to know the patterns and how reliable they are.
Altcoins
The charts I have been posting all remain valid, so no reason to be redundant with trading ideas. You can always revisit them and make them yours. I am a bit hesitant at the moment, as I am expecting a move from Bitcoin. Thursdays remain iffy for alt trading, it would seem.
FTM/BTC
Such a nice chart. Move up, consolidate, breakout, move up. I entered this yesterday on the breakout of that white line, and added more when it retested today. Hoping to see a nice move up to the top of the white descending line eventually, with targets to scale out shown.
HOT/USDT
I have been accumulating HOT for what feels like years, with a cost basis between 5-6 sats. As discussed in the tips above, I check the USDT pair on this to get "between" the order book. The weekly chart shows a clear break of the macro downtrend and a potential flip of a key support back to resistance (the weekly candle is not closed). If HOT finally exits accumulation and heads up, this could be a monster trade. The BTC pair needs to flip 7 sats to support.
MATIC/BTC
Simple - the local descending resistance was broken, which should lead to further movement up. Needs to see some volume, which does appear to be increasing at the moment. I would not be surprised to see a drop down a bit before moving up, but this should be good to go soon.
XTZ/BTC
This broke the local downtrend, retested that descending line as support and move up. It was struggling hard with resistance at 3070, which now is being tested as support. The difficulty it had breaking through this line leads me to believe that it will hold as support. Also easy to let this one go if it clearly drops below. Plenty of targets shown!
The Wolf Of All Streets Podcast Ft. Simon Dixon
Simon Dixon, Ex-Investment Banker and Crypto Expert has been involved in Bitcoin since its conception. His background in finance allowed him to establish himself as the lead early investor in the space . His company BnkToTheFuture offered early funding to some of the biggest names in the industry including Coinbase, Kraken, Shapeshift, BitPay and more. Simon is developing the future of finance, one that looks far different from what we know today. Simon Dixon and I further discuss a central bank digital currency, the world's largest regulated ponzi scheme, the world's first bitcoin conference and so much more. This was an incredibly eye-opening conversation - Simon is absolutely brilliant and will get you very excited about holding Bitcoin!
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Great Advice From Mark Yusko
Mark Yusko is one of the few "Wall Street" hedge fund managers that I have always looked up to and admired. He offers some tremendous advice in this simple tweet and I agree with every single point. These tips are so obvious, but so essential to heed - especially when you are young. Save this tweet, refer back to it, take his advice.
If you missed my podcast interview with him, it's a real doozy.
Bloomberg Finally Catches Up - China Going Digital
Authorities are testing a new kind of money in four cities.
Nothing notable here that we are not already well aware of. I think it is interesting to note when mainstream financial media finally catches up to what the rest of us in the community have been watching for a very long time. I do believe that China is attempting to replace the dollar as the world's reserve currency in general, with the digital yuan being part of that effort. I see moves towards digital money as inevitably driving further awareness of Bitcoin. Just because the currency becomes digital, does NOT mean it's competitive. Why? It will still be inflationary, it will still be monitored and it will still be backed by the government.
A digital Chinese currency (or dollar, or Euro) will more likely bring more attention to Bitcoin and it's government proof qualities. And everyone will know how to use a digital wallet!
Chart Requests
AION/BTC
AION has been moving really well and it looks likely to continue on larger timeframes, although there could be a pullback before that happens. There are 2 ways that I would draw a trading range here. The first is the blue one, which is technically correct because it has the low after the drop, drawn up to the immediate high before it retraced back. You can see that this channel was violated to the top and bottom multiple times - deviations. The larger channel is the red one, which incorporates the wick from that one day pump. This shows that price is currently trading below the EQ - so bulls want to see a strong move to the top half of that red range. Either way, the downtrend is clearly broken, as represented by the blue descending line. Any action above that ascending blue line is good - that's the immediate support. A bounce off of that and retest of the descending line could be a really nice entry, if it does retrace.
ADA/BTC
Amazing movement from this coin, it never came back to retest the levels that I had marked. That said, this looks like a short to me on shorter time frames. This is an epic bearish divergence with overbought RSI on the 4 hour chart, which tend to be very good top and bottom signals. Not always, but this looks like it needs to retrace.
The daily chart shows just how parabolic this move was and that levels were never retested. I still have orders that will remain sitting in that zone I drew around 700. It can keep going, anything is possible. But I think it will come back down to earth first.
AMB/BTC
Looking good, like many alts. This has clearly broken descending resistance, signaling a trend reversal. Price is currently following an ascending channel up, so any movement within that channel remains bullish. Bulls do not want to see the bottom of that channel lost in the short term. Levels of interest are marked, as are Fibonacci levels, which can always be used as targets on any chart. Right now is a tough entry - I would look for either a retrace to the bottom of the channel or for price to flip a key level to support.
ARK/BTC
This is a difficult chart for a few reasons. There have been some serious volume spikes over the past few months, but basically every single one has resulted in a huge wick up and strong selling down into the movement. I don't view that as bullish. That trend will end eventually, but there is clearly someone that takes advantage of every move up to unload huge positions - probably ARK themselves, but that is just conjecture. There as a huge volume spike just a few days ago which left a hideous candle with a massive wick up. Price is also trading below the cloud, below the EQ (center line) of the blue trading range and showing some potential downward movement after the candle from two days ago. I can see no reason to trade this when there are so many alts to choose from. It could go up like everything else, but I don't see that in the chart.
BAND/BTC
SWEET! I posted this little bull flag on Tuesday with the target and price hit it with a little extra above. Hard to know what will happen next, but that was a perfect trade for me already.
FNKO (FUNKO INC.)
Stock charts are absolutely ridiculous and basically useless. That said, this could have just topped out at the top of this channel for now. The true macro downtrend would be broken with a breach of the descending blue line. For now, this is still a relief bounce and could be construed as a bear flag. I would not enter this until it breaks the descending blue line, personally. That said, I know nothing about the company or it's fundamentals and this chart is a bit silly.
GNT/BTC
Descending wedge inside a descending wedge. This looks potentially very bullish, but I would not trade it without a clear breakout of the larger pattern, personally. It retrace it's entire last move up almost perfectly to the 78.6% Fibonacci - no technical reason for it to head down further. I am setting an alarm on that upper descending line.
HIVE/BTC
Laughable chart, almost insulting to anyone who bought early. Above 2829 would offer some hope that it could be reversing, as that would be a resistance to support flip locally. That could also be construed as the top of a local trading range (not drawn). I don't even love this channel, because it starts at a bit of an arbitrary point. But a break above the blue channel would also be encouraging.
For me, no interesting below 2829, simple.
LINK/BTC
Posted a setup last week with an entry at the break of descending resistance. It went up 14% from there, not bad. That said, I think this has topped out for now - there is clear bearish divergence in overbought territory on RSI. If 45278 does not hold, I would look for a drop to the next support or that old ascending black line.
MCO/BTC
Weekly chart, so there's some time left for the candle to close. That said, it looks likely to break support of this ascending channel. If that happens, I would expect a drop to at least the support lines drawn (either is possible) or even further to the bottom of the channel.
If alts continue to rise, I would say drops of that size are not really that likely. It's what the chart says though.
Price action is really strange on the daily, honestly. That rounded top there is not something you see often. If you are trading the daily, I would wait for a break of the descending blue line or watch the area of the black line for a bounce. Still just see this dropping.
NEXO/BTC
I have not looked at this chart in quite a while but it seems that all of the levels that I had (I did not change them today) remained valid. It's at support now, both ascending and horizontal. That said, I hate that huge wick the other day, never a great sign when a rally is sold into that hard. For now I could see an entry with a stop below the ascending blue line if you are eager to jump in. Safer bet is a break of that blue descending line.
POWR/BTC
I don't see anything compelling at the moment. There are 2 ranges that can be drawn from the recent pump. Price is trading below the EQ (center) of both of them. The descending blue line seems to be the key.
RLC/BTC
Wicks all over the place, makes it a bit difficult to chart this. I would say that it's working on a breakout locally of the blue symmetrical triangle. If it fails, I would look to ascending support to hold, as well as the 50 MA which has been flipped for the moment. The real downtrend ends with a break of the descending black line. For now, no immediate trade here in my eyes. Above that black horizontal line would also be very encouraging.
SPY
Good luck figuring this thing out, but I did short it this morning, right at the 78.6% Fibonacci. That's technically a perfect retrace of the parabolic move down. Otherwise, this continues to defy gravity and move up, breaking through every ascending wedge or pattern that you can draw. This is a simple trade for me, a few percent above that pink line and I will let it go.
XAU (GOLD)
Easy to get caught up on lower time frames, but the monthly looks decidedly bullish. The longer term ascending channel was broken to the upside and the major supply zone has been breached, with the bottom tested as support. With wide stops and proper management, gold "should" eventually continue up.
XLM/BTC
Sitting on a key support level right now. This "could" be an entry, although I think it looks likely to see some retracement. With a tight stop, you could take a shot here. I am personally looking for a retest of 799 or 752, if I can get it. Larger scale, amazing support at the 61.8% fib level of this entire move. That was a hell of a spot to take a long position.
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.