Zig Zag

Last week I was reading a lot of analysis suggesting this was the bottom for BTC. Fast forward one week, Bitcoin breaks the uptrend support at the 38.2% retracement level (3823.68) and all I hear now is that we are heading for $1500. Is this change of bias ridiculous? The long and the short of it is yes, however I believe there are some merits to this thinking. Many traders find it hard to change their bias as they either let emotions affect their decisions or have views which extend beyond their trading timeframe. To be a successful trader you need to be comfortable with systematically changing your bias when the INDICATORS and ANALYSIS suggest. However the 180 degree turn from calling a bottom of a 1 year bear market to calling a new low takes fickle to a new level. I believe the Bullish sentiment has been exaggerated by a few on the hope that the current uptick forms the platform for the bottom and I will explain why. If you were to place 10 inexperienced traders onto a simulator my guess would be that 90% of the first trades would be a buy! Why? Because inexperienced traders lack the knowledge that you are able to sell before you buy. Secondly, Crypto has given birth to a lot of new traders and analysts. Some of which are incredibly skilled however a larger percentage have only been exposed to one asset (crypto), an asset they only started trading/investing and analysing because of their belief in its existence. In both examples a traders judgement is positively swung towards the buy side. I believe this mentality influences an analysts need to call the bottom. Think back to the highs, how many people kept trying to the call the high? Very few and those who did were the systematic thinkers amongst us not afraid to suggest crypto could fall. There of course exceptions to my perspective above but just ask yourself, do you HODL and if so why not HODL short? *This started out as BTC analysis and turned into a whole different beast. I hope you find my take on trading emotions interesting*

ETH update: Ethereum continues to tumble with majority of indicators pointing towards a fall to the $100 level. Oscillators (RSI and Stochastic) oversold on daily time frame however due to the volatility we can't rely on this to indicate the bounce. In the image above I have highlighted 3 volume peaks all of which have been eclipsed by this recent move. This COULD be evidence of an exhausted move. The spike lower is due to an increased number of market participants cutting losses. Spikes of this nature with exaggerated volume can indicate the end of a prevailing trend. This could simply be the unwind of the ICO rally we saw in 2017. If this is the case we will see markets hold support and consolidate. This could then be followed by an aggressive rally. Keep an eye on $100. Not Financial advice.

BTC update: I forgotten how many times I have now written the words RSI oversold. The "textbook" rule teaches you a market is oversold when it hits the 30 region. During highly volatile movements you should adjust this to 20 to compensate. A couple of days ago we hit a level of 9... This tells me there is a state of panic in the market. I personally use this as a signal to drop the RSI indicator and increase focus on key levels of support and resistance. In the snapshot of the market I have used different shades to indicate the support and resistance. Right now we have held above the $4000 region and ranging between support 1 and resistance 1. Before I go any further I am not going to tell you this is the bottom because truthfully nobody knows! Therefore you should prepare for a number of scenarios. 1. If we break the $4000 support we could see capitulation straight to $3000 this would be another 25% drop. There is a chance of a $3500 bounce so prepare for this should we break. 2. If we hold this region we have 3 key resistance to break with the $6100 likely to be the toughest. Depending on how the rally is initiated we could see an aggressive move that breaks all 3. Right now I am waiting for a break taking a position now is like flipping a coin. With increased uncertainty and higher volatility comes higher risk... never forget that!

Today's movement is a prime example of an event which many can learn from, including myself. Those who say they have nothing to learn are kidding themselves. So... How many people hit stops? How many had stops in the first place? How many over leveraged? All questions you can ask yourself when looking to better your approach. As for DGB I gave 2 scenarios the other day with the least likely playing out. The aggressive nature of the sell off has come from BTCs break of support and I believe this has dragged the whole market down. We can see we spiked through the $0.017 level I had highlighted before however with aggressive breakouts the initial move tends to over extend hence our pullback to this level. If we can close above this will continue to act as support with the $0.0157 region our last major support to the downside. Many indicators suggesting oversold so I wouldn't surprised if we bounced a little tomorrow. However such a move should be traded with caution as we are in unchartered territory for BTC in 2018.

DGB Analysis: Price tracking towards the current support region at $0.02019563. The region has held since August. It has been tested 3 times, the more a support is tested the weaker it will become therefore a break could see a move down to $0.017, the low from late June. This however is the less likely scenario right now given both RSI and Stochastic on the 4H chart are oversold. You will notice I have highlighted 3 resistance lines. Each has been a key level in the past. Notice how each one happens to be a round number $0.022, $0.023, and $0.024. Psychologically we naturally see round figures as "nice" prices to buy and sell. The concentrated buying and selling around these prices forms these key levels. Should we bounce from this level I would expect a fresh test of the $0.022 resistance where we could then pullback. The $0.02019563 is by no means impenetrable and for that reason any long position (buy) should be coupled with a stop just below the 0.020 line. A more aggressive stop would be to double sell the break and ride the trade south. As always this analysis is purely my opinion and not financial advice.

Reference: Oscillators for previous analysis

Thank you to Niffler and TUBE for hosting this competition it only seems right that I post some TUBE analysis. If you haven't read through my previous TUBE summary please take a look as the Support and Resistance 2 carry over from this. I have excluded all oscillators to provide a more concise chart. Focusing on the 4 hour timeframe we can see the last 4 days has seen the price track a tight sideways range however converging Bollinger Bands would indicate the possibility of a big move in the near future. The horizontal blue line is the support from the last analysis and although it didn't hold perfectly it has identified a consolidation period. This is important as buyers are clearly present at this price point and we have a strong support not only seen here but also in the past. RSI is neutral as it sits on the 50 zone giving me no information of likely direction. Stochastic has bounced from the low however it is showing signs of indecision as the K and D lines cross back and forth. MACD on the other hand is bullish and heading for a zero line cross to the upside. Mixed results from the oscillators but not surprising given the price action last couple of days. That in mind you could drop down to the lower time frames to get a shorter term perspective for an aggressive entry or wait for a more concrete setup. * Please see next trade for image of oscillators mentioned above.*

ETH: I want this analysis to purely reflect support and resistance (ignore the bullish oscillators). We have two clear levels marked by the red dotted line. The Support at $187.35 and the Resistance at 203.34. Both these levels have been taken from past examples of where the market has either bounced or pulled back from these regions. We would therefore expect buyers to come into the market at $187.35 and sellers around the $203.34. These two points form the parameters of our current range at the moment. Between these two points I have plotted a black line representing another key level from historical price action. The $195 region is likely to act as the pivot between retesting the resistance or falling to the support. Lastly I would like to comment on the 4 trend supports I have drawn. Notice how the gradient declines from an initial sharp rise to the more recent and more shallow one. Let me know how you would personally analyse this? Would you say 1 -The market is losing momentum and this is reflected by the lower gradients. Or 2 - A lower gradient support is far stronger and more stable and therefore represents a better chance of a rally? Comment below.

I posted this a week ago: "Quick BTC update: Right now across different exchanges BTC is trading at conflicting prices due to the Tether episode. All analysis here is done using the Niffler price which I believe tracks Bitfinex closely. Earlier this week we rallied aggressively on volume up to $7800 due to fundamentals based around the Tether situation. In this instance TA becomes second port of call to FA. Market has now calmed down as we begin to retrace back to a number of key supports. RSI appears neutral on the daily, bearish on the 4h and bullish on the 1 hour. Mixed signals such as these have to be further analysed depending on your trading style. Stochastic is bullish on all time frames with it bouncing from the lower boundaries on the Daily and 4 hour. This would suggest longer term bullish activity. In the short term I would expect $6600 to be tested but anticipate a drop to the 61.8% retracement from the rally in September. The $6460 level has been support in the past a is where I would expect a bounce from the Tether rally. All analysis is my own opinion and not financial advice." We are now resting on the 61.8% Fib level with the 4H oscillators overbought suggesting a bounce. Looking to take on an aggressive long position here with eyes on $6600 and $6800 regions as profit targets.

LTC: When charting the Altcoins you will notice a number of them are taking a similar shape - Litecoin is currently forming a Symmetrical Triangle. There are two trades we can execute to take advantage of this formation. The first is to trade the range between the converging support and resistance. It's important to take note of the risk to reward as it will begin to diminish as the price action gets closer to the triangles point. The second trade is whats known as a breakout trade. Each of the red boxes highlights potential points where the price could break support or resistance and start a new trend. To take advantage we would look to buy LTC on the break of the resistance or sell LTC on the break of the support. Both trades have their risks! Right now we can see the Stochastic is heading into the oversold region, a likely sign we could find support and bounce from this region.

TUBE: Since July TUBE has formed whats known as an inverse head and shoulders pattern. This is a common reversal pattern and you would expect a rally on the break of the neckline. In this instance you can see it rallied through the neckline level at $0.095 (The red dotted line highlights the continued neckline) however TUBE was unable sustain this level and has since dropped back to this key support at $0.085. This is a Bearish movement because not only has the price action rejected the Bullish reversal but its has broken a clear uptrend (blue dotted line). RSI and Stochastic however suggest a short term bounce which could see it retest this $0.095 level (neckline). I am looking to buy around $0.086 which has been a previous support and resistance - stop below $0.080 and take profit at $0.095. Ratio better than 1:1. Although this trade is going against the Bearish nature of the price action the market has histroically bounced when the RSI has hit the oversold level (30) and in addition one could argue a second up trend support at this level. Break this and you could reverse your position and go short.

Quick BTC update: Right now across different exchanges BTC is trading at conflicting prices due to the Tether episode. All analysis here is done using the Niffler price which I believe tracks Bitfinex closely. Earlier this week we rallied aggressively on volume up to $7800 due to fundamentals based around the Tether situation. In this instance TA becomes second port of call to FA. Market has now calmed down as we begin to retrace back to a number of key supports. RSI appears neutral on the daily, bearish on the 4h and bullish on the 1 hour. Mixed signals such as these have to be further analysed depending on your trading style. Stochastic is bullish on all time frames with it bouncing from the lower boundaries on the Daily and 4 hour. This would suggest longer term bullish activity. In the short term I would expect $6600 to be tested but anticipate a drop to the 61.8% retracement from the rally in September. The $6460 level has been support in the past a is where I would expect a bounce from the Tether rally. All analysis is my own opinion and not financial advice.

BTC Update: Mixed signals all round. You can see from the 4 hour time frame the stochastic is testing the upper boundary which indicates BTC is overbought. If you look closely at the stochastic indicator you can see the K (blue) has just crossed the D (orange) to the downside suggesting we could see a short term move lower. RSI on the other hand has bounced from the lower boundary and is trending upwards. In addition to the oscillator I have highlighted the recent volume. The red spike confirms a trend reversal and the low level volume on the green candles shows weakness in any rally. This adds to the bearish bias shown in the stochastic. To add to the confusion the daily chart shows a different picture with both oscillators bullish. In this situation I would tend to wait for a more consistent set up. Should I take on a speculative trade it would be with reduced risk and more conservative on the entry.

Generally ascending triangles break to the upside but this is Crypto after all and you have to be prepared for all scenarios. As we broke through the trend support market accelerated to the downside as you would expect. This is a typical breakout move and would have provided a decent trade set up. I have drawn the Fibonacci Retracement for the last two up trends and overlay to show how consistent the support and resistance levels have been in BTC. Right now the price is trading between the two 78.6% levels where I expect it to consolidate. In addition I have adjusted the Relative Strength Index (RSI) boundaries to 20-80 accommodating for the higher level of volatility. On the 4H both Stochastic and RSI are very oversold giving further suggestion we could hold this level. Upside target on any long position would be around $6450 marked by the 61.8% Fib. If however we break $6200 we could see another straight line move down to $6000 as there is very little in regards to support before then. So tight stops on any long positions and a quick scalping opportunity to the downside. If we go that low I would expect bulls to re-enter the market at $6000 as they have done on numerous occasions. This is just my own opinion and not financial advice.

BTC Analysis: I have included 3 Oscillators in the chart above. The first is the relative Strength Index (RSI) which is a momentum based indicator. Currently the RSI is approaching the upper boundary at 70. Generally this is a signal that the market is overbought however shouldn't be solely used to identify a reversal. Stochastic is our second oscillator and this has also hit the upper boundary adding to our oversold bias. Our final Oscillator is known as the Moving Average Convergence Divergence (MACD). Unlike the two previous this is bullish as the MACD has crossed the signal line and broken clear of the zero line. Besides the indicators the price action has established a solid uptrend and is now forming an ascending triangle. Although it's tempting to short at the current level I believe there is still room for a continued rally to $6800. Its here the real decision needs to be made.