The Wolf Den #63 - Potential Trades
Bitcoin
I caught a long yesterday on Bitcoin at $9100 and closed it today at $9450. I set order for shorts at $9560 and missed by about 5 dollars.
As I said yesterday when price was still dropping, I was looking to the bottom of the ascending wedge and trading range for a potential entry. That was around $9270. I did not take a position there as it blew past quickly, but figured I would take a shot on $9000 holding on at least the first try, so I entered at $9100 when it bounced a bit. It quickly jumped back into the range and above the ascending support. The black line at $9567 was my target, but I exited before it to avoid missing my chance to take profit. I also placed asks just below that for a short, but still missed. A little too greedy, as that line was front run.
I talk about this often, and it may be one of the easiest tricks for making money on quick trades... Almost EVERY impulsive and strong drop on ANY asset will have a reactionary bounce back 50%. We are seeing it once again here, which is why I was only in a long for a scalp. This does not look particularly bullish to me - just a quick retrace of the move up before likely movement further down. Once there was a clear bounce from the bottom, you could expect this move. Not always - but often.
If price can flip $9567 back to support, I will start to feel more optimistic. For now, my gut says more downside. I have outlined areas countless times that I am interested in buying below.
BTC Dominance
People often watch the dominance chart for signs that alts will be tradable. You can see that dominance has dropped consistently for the past few weeks - hence fun alt trading. I am not a huge believer in charting this, but since a lot of people choose to look at it, it's worth noting. You can see that dominance was rejected at resistance and is barely holding the major support. If that support line (asending) fails, we could see a full blown alt season.
Altcoin Trades
AION/BTC
This is in an interesting spot, retesting the EQ (centerline) of the channel as support. If that holds, price should reach the top of the channel at 1466. The key support is the ascending blue line. If price drops to there, an entry with a tight stop has a very good risk/reward ratio. I could see an argument for entering a trade on AION in the current area. A break above the red range would be very bullish. Regardless, this has broken the main descending resistance, so the ultimate target is the top black line. That could be wishful thinking, but it's what the chart says.
CHZ/BTC
This has a lot of potential. This is clearly in an ascending triangle, which statistically should break to the upside. There are two ways that I would approach a trade here. One I have drawn, which would be a break of resistance and retest as support before another move up. That is the "classic" ascending triangle set up. The other is on the ascending pink line (I circled it, but it could be anywhere on that line). That would be another support touch, which has been strong. Easy to cut bait with an entry there if candle close below that ascending line, so good R/R. For either trade, the stop loss would be comfortable below the ascending line, to avoid a wick. Fibonacci levels here look like good targets. Again, there's NO TRADE at this moment, but a POTENTIAL setup that has formed.
ENG/BTC
A few people have asked for an update. Absolutely nothing has changed. This is a weekly chart and therefore a long term swing trade. It has still broken out, it is still holding support. This is major potential, but a smaller than normal position size with a wider stop may make you feel more comfortable with it.
ENJ/BTC
We have been watching this now for weeks, every since the large move up. You can see that we now have clear bullish consolidation in a descending wedge. A break to the upside should target the pink line at the top of the wedge, which is also a key weekly level, as you can see below. The line at 2077 is also important - you can see it below on the weekly. At this point, I want to see a breakout from the blue wedge above. If that happens soon, a retest of the wedge and 2077 as support would be the ideal entry for me. There is NO TRADE here at this moment. This only triggers if there is a breakout, and I might still miss it if it does not retest.
ERD/BTC
This has been a monster trade for many of us. I still have about 50% of my position and am planning to hold it a while. ERD is a groundbreaking project with a mainnet coming up soon. I think this has a ton of potential and am already playing with the houses money from trading it. That said, traders want to see 27 continue to hold, with a target still above at 35. If 35 breaks and flips to support, the sky is really the limit in my mind.
FUN/BTC
I shared this yesterday as a chart request and it played out perfectly. Here is what I said - "Bitcoin has temporarily ruined the “fun,” but this pair was moving really nicely and should continue to do so if the market allows it. The break back above the ascending black line and key red level are both very bullish. A retest of those now could be great entries with solid risk reward. Easy to take a small loss if price starts closing candles below."
The best entry is now behind us at 37 - I did not take the trade either but hope whoever requested it did. Anything above the ascending black line and especially 37 still looks really bullish. It has also formed a new descending black resistance locally - a break of that would be the entry worth watching no for me.
Zooming out, you can see how well the Fibonacci levels line up with the price action on the left and where one would draw resistance levels. So you can use those as targets if this really gains speed.
HOT/USDT
Like ENG above, this is a weekly chart and will take age to play out if it does. Nothing has changed at all, it's above the descending line with some nice support tests that have wicked below. BTC will greatly effect this if it drops, because we are watching a USDT pair here, so keep that in mind. You have to have a ton of patience for a setup like this, so I would not wrap up a huge portion of your trading portfolio. Either way, same as it was before.
ICX/BTC
Lots of potential here. It's in a huge descending channel, but also a local bull pennant after a nice move up. At this point, the highest probability trade is a break of the pennant to the upside - so a break of the descending black line on the right of the chart. You could also take an entry on a bounce off of the support line which is ascending, in the current area. That said, ALWAYS BE WARY of a bull pennant breaking support and becoming a bull flag instead. A lower low can make a perfect descending channel. That's why I prefer to wait for the break of the top resistance. The target is based on the length of the flagpole, measure from where this breaks out. So what is shown is just an idea - I don't know where it will break out, if it does. That would send price above the descending channel and put higher target in play.
QTUM/USDT
This was a late request, it is NOT a trade that I am personally watching.
The USDT pairs always depend tremendously on Bitcoin's movement. This is an an ascending wedge after a major move down. After such an impulsive drop, you expect a reactionary bounce of roughly 50% - you see across markets and charts all of the time and it is something I frequently mention. This has almost retraced 50% and has entered an area of supply/resistance. I would not feel comfortable trading this unless it flipped that entire zone to support. Right now, this looks more like bearish consolidation before another likely move down. Watch to see if the ascending black support breaks down - it's close now. If this flips that zone and breaks to the upside of the wedge, it could continue.
STRAT/BTC
This was a late request, it is NOT a trade that I am personally watching.
This is a tough one to read for me. I want to say that it's breaking that descending line, but that line is not really valid for me with that huge wick through. Either way, this coin is clearly in a large range and trading sideways in the bottom half of the range. I would like to see it above the dashed line (the EQ), because that is a key level of resistance. Flipping that to support should send price to the top of the range. If you are a believer in that descending line, this could be a nice entry, as it's being retested as support. No trade here that I am personally interested in.
TOMO/BTC
A few people have asked me about my TOMO trade, saying that they got stopped out. This makes sense - there was a really savage wick. I want to show you how I managed it.
When I took the trade, I immediately set my sell order for half of the position at 526. You can see this below in the order history. My thinking for setting 526 was to sell just below that key line shown above on the chart. I never set my orders at obvious levels. I went with 526 instead of 530 and luckily caught the top. Again, you can see below that I set that order 10 minutes after taking the trade on June 8th. I also set a higher oder for the remaining 50%, which I canceled to trail it up.
I NEVER take a loss on a trade when it is in profit, so I always move up my stops. I stopped out at 4951 for the rest of the position when price dropped, just below that previous swing high at the pink line.
All of that said, TOMO actually still looks decent. Anything above the green line is still technically a breakout and retest.
WAN/BTC
This looks a bit like AION and is in an interesting spot. It clearly broke the blue resistance and has been traveling up in an ascending channel. I shared this many issues ago, but never entered a trade myself. Price is currently at a really important resistance, that red box across the chart. You can see how much price action there has been in that area over time. If that flips to support (daily candle close above), I would likely enter on that retest. This should eventually reach the top of the blue line, or at least the upper black line. If it breaks down from the ascending channel, I would bail.
XVG/BTC
This is already flying and I have no intention of chasing it. The only trade I would personally be interested in for the moment is a retrace back to retest 58. Then I would target the above lines as they come. If 71 can flip to support, I would consider an entry there. For now, this is floating between levels and moving fast, so I would not dare try to time it.
My Recommended Platforms And Tools
Voyager
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Phemex
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RoundlyX
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TexasWest Capital
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions.
Choice IRA by Kingdom Trust
Self-Directed IRA for Americans - allows you to invest in Bitcoin and any other asset for your retirement, with all of the tax benefits of a normal IRA.
Efani
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
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BlockFi
BlockFI is where I personally store part of my long holdings. They offer up to 8.6% annually, compounding, depending on the asset (BTC, ETH or GUSD), which is much better than any legacy savings account or investment.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
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.