Bitcoin
Well another day has arrived in Crypto world. What did we learn? Firstly all that glitters is not gold, secondly, and for those that threw money into the Bitcoin furnace at the $19,000 range, welcome to what a full on mania fuelled Bull trap looks like. Now will you get your money back? Honestly, At some point I would think so, when that point will be I’m not sure; especially in light of the futures market that is about to land on us. It could be days, it could be weeks, or it could, though improbable be never. In trading cryptocurrencies or any other commodity, the rules of gravity don’t apply. What goes up, does not have to go down (Amazon, Berkshire Hathaway, etc) and what goes down, may never go up again; (Cisco, Yahoo etc.). In this instance, as this is a new technology, I don’t feel as though the bubble has yet burst.
In order to trade successfully in any market don’t narrow your focus to just that market, that commodity, that time frame etc. Instead look at all markets, all commodities and all time frames over the last 100 years that preceded it. All the indicators we now use to predict price action such as averages, ichimoku clouds, MACD, RSI etc.; all were created based on predictable and repeated patterns of human buy/sell behavior over time.
Avoid traps and trade successfully by seeing the charts for what they actually are; merely a measure of the human greed/fear cycle. As I have written before, the asset may change, but we don’t. We are still the same greedy assholes we were when we lived in caves. Hell the survival of our species depends on our inner desire to put self preservation and resource accumulation above those of others. It’s hard wired into our DNA, and plays out in all aspects of our lives; it is what provides us the drive to outshine competitors when trying to win over a mate, breed and push our DNA forward to the next generation. It plays out in the Market every day. When I’m trading, my goal is to fuck you over and take your resources, when your trading your goal is to likewise fuck me over and try and take mine. The market is not a zero sum game, any money entering your wallet came from someone else’s, the inverse is also true .
I once heard a saying that goes along the lines of “if you want to be a successful, study successful people and do what they do”. I say take it a step further and narrow your search for titans in your field of interest. So who is the undisputed World Heavy Weight Champion of Investing/Trading? Why the Oracle of Omaha, Mr. Warren Buffet of course. So what can we copy from him, well first let’s look at his mindset.
"The best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive."—Warren Buffett
This goes along the lines of be a student of history, of the charts that preceded the one you are focused on. Study, increase your knowledge base and gain a sound understanding for how the market works before you begin throwing dollar bills at it.
“When a person with money meets a person with experience, the one with experience ends up with the money and the one with money leaves with experience.”—Warren Buffett
This is probably the quote of his that had the most profound impact on my understanding of the market and ties directly into the quote above; experience is gained through time and investment in yourself. Sure, I will likely never actually meet any of my readers here, but you see me in the market every day, you just don’t know it. To you I’m nothing more than one of many green or red blips in the order book, but some whom arrived yesterday with money, will be leaving with experience and I will be leaving with money. This not meant to be a self absorbed go me statement as when I started trading, many years ago, I left the table many times with nothing but experience and the whales, sharks, and dolphins walked away with the money. In fact years ago, I donated $15,000 to the experienced on a bad margin call; been there done that.
Lecture over, and on to the good stuff. Bitcoin price action yesterday was predominantly controlled by small to mid size speculators running the price up through Coinbase by repeated smashing of the buy button by the FOMO crowd like they were playing a game of whack-a-mole. As could be expected the price rose to new highs in line with my previous prediction before crashing back down to reality, parting many with their hard earned capital and leaving the high buy point HODLERs with buttholes so tight you won’t be able to pull a pin out of them with a tractor. The largest losses likely belong to the Panic Sell and Panic Sell/Revenge Trading crowd.
It is fairly well known by those of that trade that when an asset begins rocketing up at an unprecedented rate that it will rocket back down in commensurate fashion. That it CANNOT, remain at a high point of divergence on the MACD, or Overbought on the StochRSI it has to come down to find balance. I have through my experience noticed that the most violent moves one way or the other typically start when you see the 1 hour MACD/Signal line begin to look like one traveler going West and the other going East. The 12 Hr, 1 & 3 Day, and 1 week charts remain virtually unchanged in regards to divergence and being overbought. The StochRSI is likewise trend down which is indicative of future losses to come. While the 35 percent or so decline from its high around $20,000 to the mid $13,000 range yesterday would have been a major crash a few weeks ago, it is really of no significance now when compared to the big picture.
The recent volatility has numbed us to these swings, as such I predict a 60-100 percent reversal could still occur according the longer term charts.
Etherium @ $454
I say Etherium as with most solid Alts would be a buy right now, especially if Bitcoin continues to trade sideways and begins a period of consolidation. As is the case in the Crypto world, traders bore easily if Bitcoin is not making 5 percent daily gains and switch teams. Look for highs in the $400’s. I doubt it will see $500 today as I’m putting my money on LiteCoin.
LiteCoin at $102
Good news is on the horizon, the longer term charts show Litecoin going positive in a big way today. The 12 hour time frame is happy, having fought off the bears throughout the 90’s and absorbed the effects of money being sucked out by Bitcoin. A positive move in this direction will drag up the daily time frame to positive territory which usually sends litecoin on short term moves to the moon before beginning a long period of consolidation. I’m riding a 100 @ 97.50 as well as I added another 350 at $95.50 yesterday afternoon. My prediction is that Litecoin will be a money maker today. Look to get out when the volume begins to dry up and it appears to be topping out.
My previous analysis:
@pawsdog/7whdbh-12-6-2017-the-market-view-and-trading-outlook (Actually 12/7, I goofed the title).
@pawsdog/12-6-2017-the-market-view-and-trading-outlook
@pawsdog/12-5-2017-the-market-view-and-trading-outlook
@pawsdog/12-4-2017-the-market-view-and-trading-outlook
