Category: Intraday Update

Short Term Update: Sometimes simplicity is the answer

On By CryptoAdvisorIn Intraday Update, Short Term Trading
BTCUSD Daily Chart and 50% retracement support

After a strong rise from $27,000 to $42,000 I think it is time for a break, in these situations sometimes the simplest approach is the valid one. The most obvious support is the 50% of the range at around 34,800$.

The closest dynamic support are the deviation bands of the kama average on the 4 hour timeframe.

I’m not saying that BTCUSD will go there, it could be an opportunity to buy if this scenario materializes. Don’t forget that when the market is fast you can lower the timeframe to find better support areas, as you can see in the above chart KAMA deviation bands worked well during the sell-off down to 27,000$ last January 4. Under these circumstances the daily chart is too slow to adapt.

You often ask me when to enter a trend already started, usually it is never too late to buy the important thing is to place a stop that is beyond the deviation bands that I use, to stay safe from volatility. Let’s see an example on the daily chart.

BTCUSD Daily Chart with kama average and an ideal dynamic stoploss – KAMA parameters that i use are included.

You can buy at any moment a well established trend but keep in mind that the right stoploss to use is wide, not tight because Bitcoin volatility is high.
If you don’t like KAMA average and the way i compute bands you can give a try to Keltner Channels.
Personally i prefer the approach of Mr.Kaufman but the choice is yours.

Offtopic: Cacoethes scribendi

On By CryptoAdvisorIn Intraday Update, Long Term Trading, Other, Short Term Trading1 Comment

“Cacoethes scribendi” or translated from Latin to english “a burning desire to write”, writing always of bitcoin sometimes is boring, today i show you the template i use with metatrader 4 applied to other assets like stocks, indexes and altcoin.

I already explained that an idea that i like is to do a price regression of our asset using a filter that eliminates all cycles below 30-40 periods with the intent to extract the underlying long term trend, then you can try to earn some money trading the secondary cycles that move the price up and down inside the price channel.

SP500/N100 weekly chart

sp500

Mid channel line color is white thus this market is neutral the ideal situation to trade the price levels, at the moment there could be a short opportunity, stoploss above the dotted positive deviation line.

n100

Similar situation for the nasdaq 100 index.

GBPUSD

gbpusd

The big drop of the Brexit is clearly visible, the pound should stay above 1.29, it’s the moment to buy with a stoploss below 1.28

Nikkei 225

nikkei225

Nikkei is short for Japan’s Nikkei 225 Stock Average, it is a price-weighted index comprised of Japan’s top 225 blue-chip companies traded on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the United States.
In this mothky chart is visibile the big rise fueled by the quantitative easing of the Japan Central Bank and the subsequent drop after flirting with the resistance at 21000.
At the moment it is holding above the first negative deviation line, i don’t see any trading opportunity.

Tesla

tesla.png

On the weekly chart the tendency is neutral, midline color is white, ideal to trade secondary cycles like the one that pushed down Tesla below 150 usd and below our support, a very good trading opportunity, it is possible also to trade the dotted levels but they are less safe.

Ferrari

ferrari

Daily chart of ferrari (RACE ticker), after an interesting double bottom on the support this stock trended higher above the resistance after the earnings.
I think we are seeing a buying climax and in this situations is smart to sell the good news, i see a short trade opportunity here but it’s wise to wait some weak signals from this stock before going on.

Nintendo and the Pokemon Go Bubble

nintendo

No comment here, the bubble is evident but this stock is still hovering above midline and the long term trend is bullish. Again a nice double bottom at the support.

Apple

aapl

Last five years of Apple in this monthly chart, here the support levels worked almost perfectly. Apple is losing some steam as the midline color is white, neutral long term tendency despite you can see a sequence of higher highs and lows. The stock reacted from the dotted line at around 90 usd but i’m not sure is going up yet, the trading opportunity here is a test at 75-80 usd this year or the next one.

ETCUSD – Hourly chart

etcusd

Hourly chart of ethereum classic, again bubbles are clearly visible. Some congestion outside the upper solid deviation line it’s the warning signal, be prepared to open a short. Now volatility is a bit lower and this altcoin is moving inside the dotted deviation lines. I see a buying opportunity once 1.85 usd is tested.

Conclusions

This price channel indicator is an improvement of the classic bollinger bands indicator, what i don’t like of the bollinger bands is the wrong way to compute the upper and lower bands that might lead to very misleading values sometimes as i explained at the end of this old article. To keep things simple i omitted to include some timing indicators, for example adding the Walter Bressert DSS oscillator with ethereum classic we have:

etcusd+dss

Clean cycles togheter with a correct approach to spot support/resistance levels and you have a decent guide to follow. This oscillator is configured using 9 periods and 5 periods for a second pass smoothing.

 

 

Intraday Update

On By CryptoAdvisorIn Intraday Update, Short Term Trading

This is bitcoin 1 hour price action chart since May 21, i labeled in the chart 3 points where the R-Squared indicator topped above the 0.8 thresold, i explained in this update how R-Square works. Yellow line is the ALMA moving average while below the price chart we have the r-squared indicator, classic stochastic oscillator and Chaikin Volatility indicator, last two with standard values. It is interesting to notice that on the bottom we have had a volatility peak, oversold stochastic oscillator, r-square above 0.8 and the price touching the lower support of my regression price channel. These are all good signs that may btcusd-h1-simplefx-ltdsignal a turnaround in the trend. As i explained in a previous update about r-square when this indicator cross the 0.8 thresold signaling a possible end of the current price swing (up or down) doesn’t necessary mean that the price will reverse and fall, as you can see in point C of the chart, why is this happening? Because if the overall trend is strong all the price corrections in an uptrend sometimes are not strong enough to push the price down therefore we have situations where the price stays flat or reduce its speed without doing a price reversal. At point B in the chart you can see that both r-squared and stochastic oscillator were signalling a reversal but XBTUSD stayed flat or sideway.

Furthermore the Chaikin volatility indicator can give you further information when to trade or not, here it indicated very well an intraday bottom (hopefully it could be also a bottom on the daily chart as i speculated in the previous update) again at point A.

Possible strategies are to buy when there is a retracement after a strong reaction, in this case wait a situation like the one at point A, wait the retracement after point B and buy at the subsequent price reaction to the upside to end your trade at point C where the R-Squared saturated above the 0.8 thresold. In this case we are talking about 2-2.5 usd profit for each btc traded, not much if you consider the high spread and fees charged by bitcoin exchanges, an old reason why i don’t trade intraday this market yet.