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Bitcoin Fork Takes a Big Bite as the Market looks for Logic

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If you are depending on fundamentals to trade any digital currency you will end up frustrated and broke.  In reality, digital currencies do not have the kind of fundamentals like stocks, and in this early phase of fat tail volatility, you can only depend on technical support and resistance levels to guide you. Anticipating and translating the media cycle news will not help you make money in digital currencies.  Staying with the trend in assets is a proven winning strategy.

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I can tell you much of the chatter today about the selloff in Ethereum is related to the Bitcoin fork, now I have zero idea if that should pressure prices lower, but it did, and it spread to all DC ( digital currencies ).  I noted also during this decline that all of the important support levels for DC top 25 are intact.  Let me also say that if you are trading digital currencies from the short side, or day trading them, you are a member of an elite club that is currently the fastest game in town, and you are holding firecrackers in your digital wallets.

The Trend is Your Friend

During trending markets, it is always practical to trade with the trend versus bucking it, so if you are involved in these currencies you will find it more manageable to trade from the long side.  I suggest you watch the next up-move and watch how these DC’s (Ethereum, Litecoin and Dash) have melt ups.  This frenzied buying reflects the trend, and as long as the support levels remain intact ($165 in ETH) the melt ups will continue.

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The chatter about the Bitcoin fork is irrelevant, and the movement in DC could have easily been related to Trump Jr releasing his email string to wolving reporters.  If you look at the stock market today as soon as Jr tweeted all assets sold off.  So the Bitcoin fork is just an unnecessary piece of silverware at an epicurean buffet.  You don’t need a fork, just load up the plate, run back to your table, and trade all DC from the long side with the trend.  Pick a digital currency and become an expert, it is important to be a ground floor follower in any asset class.  This way you are super experienced when volatility hits and will allow you to make better decisions; with this comes profit.

Fundamentals on the Sideline?

Fundamentals will have little connection to pricing for the next few years, developing trade-able fundamental metrics related to expected actions is a fool’s journey.  Stop looking at how they made the sausage.  Invest in digital currency as an asset class for the long-term.  Know that stocks like Amazon traded with the trend for a decade, real estate had 1 or 2 blips in the last 20 years, and buying pullbacks in assets is a proven winning strategy.  Over trading is for losers, cocktail chatter about how they make the digital sausage is mind numbing.  Research an asset, have a long-term investing plan, and stick to it.  Stay long any good asset, and it will be what is was intended to be – a long-term investment that will bring you security – not an unnecessary salad fork at your table.

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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Altcoins

Trade Recommendation: XMR/BTC Pair Throwback

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The XMR/BTC market (Monero) has been in downtrend on the hourly chart after posting a high of 0.0225 on December 6 and failing to hold critical support at 0.02. It went to as low as 0.0145 on December 8 before respecting RSI at 32 where it established support. The market used the new support level to rally and generate one higher low after the other. It recently attempted to reclaim support at 0.02 but was repelled by bears. Currently, the market is trading around 0.019 levels where it appears to have created another higher low.

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Technical analysis shows a large reversal pattern in the hourly chart that can take the XMR/BTC pair to 0.025. Even though the market failed to breach resistance at 0.02, investors should not see it as a failed breakout. What we’re seeing is a throwback which is a temporary retreat in price. Throwbacks are common in breakout plays and are often seen as a bullish signal. The next time the market attempts to breach 0.02 resistance, it has a much better chance of breaking it with conviction.

The strategy is to buy breakout at 0.02 with immediate stop at 0.0189.

Hourly XMR/BTC Chart on Poloniex

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As of this writing, XMR/BTC is trading at 0.018714 on Poloniex.

Summary of Strategy

Buy: breakout at 0.02

Target: 0.025

Stop: move below 0.0189 after buying breakout at 0.02.

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Altcoins

Trade Recommendation: FCT/BTC Bullish Reversal

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The market reach its all-time high back in June this year when FTC/BTC (Factom) reached 0.01463162. Unfortunately, the pair wasn’t able to sustain its momentum. It created a lower high several days later at 0.01066744 which signalled investors to take profits or cut their losses. As a result, the market tumbled and lost 93.17% in value from its all-time high. Such a tremendous loss would have created an atmosphere of despair in the market. Usually, that’s when the savviest traders come in.

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Technical analysis reveals that the worst is behind the pair. FCT/BTC touched support at 0.001 on the daily chart twice and respected it on both occasions. This is a good indication that the market has found a reliable support level. In addition, hourly chart shows that a large reversal pattern is underway. The pair may have retreated when it nearly touched 0.002, but it generated a new higher low in the process at 0.00156566. The throwback is a bullish signal that enables the pair to gather momentum to break resistance at 0.002.

The strategy is buy on breakout at 0.002. Breach that level and the market reclaims 0.003. Sell that level because it is a strong resistance.

Hourly FCT/BTC Chart on Poloniex

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As of this writing, FCT/BTC is trading at 0.001738 on Poloniex.

Summary of Strategy

Buy: breakout at 0.002

Target: 0.003

Stop: move below 0.0018 after buying breakout at 0.002.  

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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